THE
THEORETICAL SYSTEM
I,
KARL MARX '
IN THE LIGHT OF RECENT CRITICISM
LOUIS B! BOUDIN, LL. M.
CHICAGO
CHARLES H. KERR & COMPANY
1920
Copyright, 1907
Bv CHARLES H. KEKR & COMPANY
JOHN F. HIGGINS. PIINTER AND IINDEI
371-380 WEST MONIOE STIEET. CHICAGO
PREFACE.
The present volume is substantially a reprint of a series
of articles which appeared in the International Socialist
Review from May, 1905, to October, 1906.
It was my original intention to give in brief compass an
account of the causes which called forth the so-called Re-
visionist movement, the questions raised thereby, and its net
results, theoretical as well as practical. It soon became ap-
parent to me, however, that such task was impossible of
execution even within the space of twice the number
(seven) of articles originally contemplated for the series,
because of the extreme poverty of the English literature of
the subject, and the consequent unpreparedness of our read-
ers for such discussion. In treating of the causes of the
Revisionist movement, the Neo-Kantian movement in lat-
ter-day philosophy had to be touched upon, but no mere
reference or allusion to it would suffice because of the entire
unfamiliarity of the English reader with that subject. The
revision of Marxism could hardly be discussed with people
who had but a bowing acquaintance with the doctrines of
that famous system of thought.
I therefore concluded to present to the English reader,
instead of an account of the movement to revise Marxism,
an exposition of the teachings of Marx, and to draw upon
the literature of Revisionism only in so far as it may become
necessary or expedient in the course of such exposition, in
order to accentuate some of its points or differentiate them
from others with which they are likely to be confused. I
have therefore refrained from entering here into any con-
troversy with any revisionist Marx critic except in so far
as was absolutely necessary for my purpose. And I hope at
iii
IV PREFACE.
some future time to be able to resume the argument, when
I expect to take up the different critics and their criticisms
one by one and draw conclusions with them.
T have also refrained from entering into any detailed
statement of the Marxian economic theory as I did not in-
tend to make this volume a primer of philosophy and po-
litical economy according to Marx, but rather an outline of
Marxian system of thought, with the accent on the sys-
tem, that is the relation of its different parts to each other
and the unity of the whole. It is not meant as a text-book
of the Marxian teaching, but as an introduction to the study
of Marx, and as an aid to the understanding of him. And
in this connection I wish to say that in stating what I con-
sidered to be the true Marxian doctrine I never relied on
isolated statements or expressions, but always looked to the
spirit pervading the whole of his work, for the explanation
of any dark point or the solution of any problem encoun-
tered.
In the arrangement of the matter I have followed the
suggestion of the great Master: I have treated the Ma-
terialistic Conception of History as merely introductory to
the study of the actual workings of the capitalist system.
I appreciate that the problems of the Materialistic Concep-
tion of History are many and manifold, but I do not believe
that it would have been wise to burden the reader at the
beginning with long and abstruse philosophic discus-
r.r-idrs, many of the problems of the Materialistic
••j)tion of History which are considered grave, ar<
considered only because <>f the failure of many student
abject to perceive that these problems are not peculiar
to this particular philosophy, but arc problems of philosophy
'I IK re is one respect, however, in which the Materialistic
Conception of II; a harder road to travel than
any other system of thought that I know of: the persistent
'presentations of friend and foe. I have therefore
deemed it advisable to attach two appendices, wherein are
PREFACE. V
treated two points with respect to which these perversions
and misrepresentations are most frequent and at the same
time most glaring.
I hope that the volume herewith presented will give the
reader, if not an adequate presentation of the Marxian doc-
trines, at least an adequate beginning for such presentation,
and that it will serve as a stimulant towards an adequate
discussion among English-speaking people of the great
theoretical problems embraced within the realm of Marx-
Ism.
L. B. BOUDIN.
New York, February, 1907.
CONTENTS
PAGE
PREFACE . . . , iii
CHAPTER I. KARL MARX AND His LATTER-DAY CRITICS <j "^
CHAPTER II. MATERIALIST CONCEPTION OF HISTORY AND
CLASS-STRUGGLE 20 ^
CHAPTER III. THE MATERIALIST CONCEPTION OF HISTORY ^
AND ITS CRITICS 31
CHAPTER IV. VALUE AND SURPLUS VALUE 49
CHAPTER V. THE LABOR THEORY OF VALUE AND ITS
CRITICS 82
CHAPTER VI. THE GREAT CONTRADICTION IN THE MARX-
IAN THEORY OF VALUE 119
CHAPTER VII. ECONOMIC CONTRADICTIONS AND THE PASS-
ING OF CAPITALISM 147
CHAPTER VIII. THE CONCENTRATION OF CAPITAL AND THE
DISAPPEARANCE OF THE MIDDLE CLASS . 170
CHAPTER IX. THE PROLETARIAT AND THE REVOLUTION . 215
CHAPTER X. THE SOCIAL REVOLUTION 230
CHAPTER XI. CONCLUSION 255 j^
APPENDIX 1 257
APPENDIX II 272
THE THEORETICAL SYSTEM
OF KARL MARX.
CHAPTER I.
KARL MARX AND HIS LATTER-DAY CRITICS.
Marxism — that theoretical system of which Karl Marx
was the chief exponent, and which its adepts are wont to
term " Scientific Socialism " — has reached a stage in its
existence which marks it as one of those systems of thought
which in the history of the intellectual development of the
human race are epoch-making and stamp their character
upon the age the intellectual life of which they dominate.
While the fight for its existence is still raging, and it is
growing in intensity from day to day, the character of the
fight betrays the difference in its position. It no longer
fights for recognition, so to speak, but on the contrary, it
fights to maintain the position of an established doctrine,
one might say the established doctrine, a position which
it has assumed and occupied since the appearance of the
last volume of Capital in 1894.
Marx-criticism is not any the less frequent or any the
less vehement to-day than it was , at any time during the
life of his doctrines. Quite the reverse : At no time since
the first foundations of the great system of thought which
bears his name were laid down by Karl Marx, more than
fifty years ago, have his assailants been so numerous or so
active as they are now. Marxism — opposition to Marxism
— is the moving cause, the burden of the song, the ever-
recurring Leit-motif, of every new book, pamphlet, and
9
IO THE THEORETICAL SYSTEM OF KARL MARX.
essay on philosophy, sociology, or political economy, that lays
any pretensions to being abreast of the modern current of
thought. There are now being published numerous pe-
riodicals— weekly, monthly, quarterly, etc. — devoted ex-
clusively, openly or covertly, to the fighting of Marxism.
This is itself, of course, one of the manifestations of the
dominating influence which the teachings of Marx and
his disciples have obtained over the minds of human kind :
it now requires the constant efforts of a great army of
intellectuals to combat, and that with very doubtful suc-
cess, the progress of the teaching which less than a quarter
of a century ago would have been passed by one of them as
a negligible quantity in the sum total of our intellectual
life.
Aside however from its volume, the tone of the anti-
Marx-literature of the present day shows the change in
the position of Marxism. The tone of personal hostility
towards Marx, the slighting estimate of his position in the
realm of thought, and of the importance of his system in
the development of ideas, — which were once common to
the majority of Marx critics — are almost entirely absent
from this literature. On the contrary, the distinguishing
feature of this anti-Marxian literature is the homage which
aid by nearly everybody to Marx the man and the
thinker. More important, however, is the fact that most
of the new critics of Marxism do not treat it as a new-fan-
gled doctrine the correctness of which is yet to be proven,
but, on the contrary, as the old-established and accepted
doctrine which they attempt to prove false, in whole or
in part, and which, they claim, must therefore 1 •<
supplemented or superceded. No one, however, dares
openly defend the theories which Marxism has supplanted.
Almost everyone admits expressly the justifiability of
Marx's criticism of the theories which predominated before
his advent, and that Marx's theories were correct at the time
they were first stated and a proper generalization of the
data then at hand. What they claim is, that later develop-
KARL MARX AND HIS LATTER-DAY CRITICS. II
ments have shown that they were based on insufficient data,
and that our present knowledge requires the revision of
some of his tenets or the supplementing of them by some
qualifying truths, according to some, or that the whole sys-
tem be thrown overboard, it having been built on false foun-
dations, according to others. Most of the critics, however,
stop at revision. Hence, the name Revisionists, under which
most of the newer Marx-critics are known, and the term
Revisionism applied to their writings and teachings.
The most important feature, however, of modern anti-
Marx literature and that which in our opinion conclusively
establishes not only the pre-eminent position occupied to-
day by Marxism as the recognized and established sociolog-
ical doctrine, but also the fact that there is no doctrine ca-
pable of competing with it for establishment or even of
dividing honors with it, are the writings of those of the
critics of Marxism who claim that the whole system must
be thrown overboard as unscientific. These writings are the
most edifying sort of reading for a Marxist. I shall have
occasion, later on, to examine this literature more particu-
larly. Here I wish to say only this: These latter-day crit-
ics of Marx do not dare accept in its entirety any other
system which has been advocated before their advent ; and
they do not, with some exceptions which are quite negligi- /
ble, (of which I shall, however, and nevertheless, treat y
later on), advance any system, wholly or partly original
with its authors, which would be capable of taking the place
of Marxism as an explanation of social phenomena. They
almost all, therefore, fall into what may well be termed^ ^
Nihilism, that is to say, they are led to deny the existence, ^*
nay, even the possibility, of any social science. In other
words: Marxism is so much the scientific doctrine in its 1
sphere (which covers all the life of humanity in organized /
society, including all its social and intellectual manifesta- jr
tions) that you cannot destroy it without at the same time J
destroying all scientific knowledge of the subject.
It must be said, however, in justice to these writers, that
J
12 THE THEORETICAL SYSTEM OF KARL MARX.
this Nihilism is not confined to those who would destroy
Marxism root and branch. A leaning towards Nihilism is
discoverable also in most of those critics of Marxism who
go no further than revision, as is well exemplified in their
leader Eduard Bernstein, who attempted to prove the im-
possibility of scientific socialism, in a lecture delivered be-
fore a body of students at Berlin.
Of course, this Nihilism is not equally pronounced in all
of Marx's critics. But it is to be found as a more or less
conscious substratum of their criticism in all except those
who confine their criticism to some one phase or branch of
the Marxian system. These later critics, not dealing with
the system as a whole, naturally do not feel the void created
by the supposed demolition of the Marxian theory, and can
therefore run their course merrily without feeling con-
strained to either fill the void^or account for its existence.
Those however who viewed and reviewed the system as a
whole could not but feel the aching void which would be
left if the Marxian system were demolished; they naturally
looked for another system to be reared in its place, and, that
task proving beyond their powers, they fell into Nihilism.
Thus the question whether Marxism is or is not science
turned into the question whether there is, or could be, any
social science. How keenly this was felt by some of the
critics of Marxism can be judged from the following state-
ment of Dr. Paul \Veisengruen, one of the ablest critics of
Marxism and one of those who believe that the whole Marx-
ystem must be abandoned as being radically and basi-
cally false. He says, alluding to the so-called "crisis" in
Marxism, by which term the Revisionist movement is some-
tinu's designated — "The crisis in Marxism means a crisis
in the whole range of social science."
All this makes it absolutely imperative to re-state the
Marxian theory, in the light of this new criticism, examin-
ing the objection with a view of determining
whether and how far this criticism has led, or must needs
lead, to a revision, modification, or abandonment, of any
KARL MARX AND HIS LATTER-DAY CRITICS. 13
of the subsidiary or tributary theories of Karl Marx; and
whether such revision, modification or abandonment, if any
be necessary, affects the Marxian system as a whole.
This is the. only way in which the latter-day critics of
Marxism can be properly answered. It is absolutely im-
possible to reply separately to every book and article writ-
ten by them. Besides, this would be a waste of energy even
if it were possible, for a good deal of this literature is mere
repetition, or is based on the same assumptions of fact or
logical deduction. And it is also impossible to take one of
these writers, as typical of the whole movement, analyze
his arguments, and estimate the value of the whole move-
ment thereon, for the reason that Marx-critics are an ex-
tremely independent lot and it is therefdre hard to find two
of them agreeing on all points. Not only does each of them
follow his own or what he at least thinks is his own line
of argument, and draw his own conclusions, but these argu-
ments and conclusions are very irreconcilable with one an-
other arid often have a tendency to refute one another.
Furthermore, they do not very often agree with each other
as to what is Marxism, that is to say, as to what are the
essential elements of Marx's theoretical system. So that
among the critics of Marxism the rule seems to obtain that
not only does each tub of criticism stand on its own bot-
tom, but that every man constructs his own Marxism.
With some of these critics, of the cheaper sort, of course,
this method plays peculiar pranks. A Marxism is con-
structed, which, while easy of refutation, is so much differ-
ent from the doctrine of Karl Marx and his disciples that
nobody cares a whit as to what happens to it.
All of which goes to show that it would not be fair, and
well-nigh impossible, to treat any one of these critics as typ-
ical of them all. Each is entitled to a separate hearing,
if he is to be answered. This claim was expressly put forth
by one critic of Marxism. He argued that while Marxists
should be held responsible for one another, for the reason
that Marxism was a well-defined system of thought and
14 THE THEORETICAL SYSTEM OF KARL MARX.
body of doctrine to which all adepts of the school are ex-
pected to adhere, the opponents of Marxism, and particu-
larly those of a nihilistic bent of mind, belong to no school,
believe in no particular system, in short are a lot of free
lances and must be treated accordingly.
This makes a systematic review of the Literature of An-
ti-Marxism — the only term which is comprehensive enough
to include all of the Marx-criticism — impossible. We will,
therefore, at this time, only briefly characterize its leading
features, and mention the most important authors, leaving
such discussion of any individual writer or argument as
may be necessary to the time when that particular part of
the Marxian system to which it may be most pertinent will
be taken up in the topical discussion which will follow.
The appearance, in 1894, of the third volume of Karl
Marx's chief work, Capital, naturally led to a revival of
Majx-criticism. But this revival was not in any way gen-
eral, and nothing of importance in this line immediately
followed the publication of the third volume of Capital,
with the single exception of Boehm-Bawerk's essay on
44 Marx and the close of his system," which, because of the
method in which the subject is treated really belongs to the
old rather than the new style of Marx-criticism. Boelnn-
Bawerk's essay which deals with Marx's economic teachings
was followed, in 1896, by Professor Rudolph Stammler's
important work on the Materialistic Conception of History.
The real beginning, however, of the anti-Marxian literary
from the publication by Eduard Bernstein
in iXg; of his series of articles in the Netic Zcit, the organ
of thr < '.rnnan Marxists, under the title "Socialist Prob-
lems," in which the first attempts at Revisionism manifested
then Later, in discussing the net results of the new
Marx-criticism, we shall endeavor to explain the cause
which led Bernstein to a discussion of these "problems."
Here it is sufficient to say that aside from the inherent im-
portance of the problems and the causes which led up to
and brought about their discussion the personality of Bern-
KARL MARX AND HIS LATTER-DAY CRITICS. 1$
stein played an important part in the profound sensation
which his articles, and afterward his book " Die Vorausset-
zungen des Sozialismus," created.
It must be remembered that for years Eduard Bernstein
had been one of the recognized exponents of Marxism. He
was the editor of the Zurich " Social Democrat," the offi-
cial organ of the German Social Democracy during the
Bismarck anti-Socialist laws. He had for years been closely
associated with Frederick Engels, the co-worker of Karl
Marx and one of the fathers of " Marxism." He was, there-
fore, rightfully looked upon by both socialists and non-
socialists alike as one of the leading representatives of
scientific socialism. His demand, therefore, for a revision
of Marxism gave an impetus to Marx-criticism never
equalled before. Everything now made for Revisionism.
There was a general overhauling of old beliefs and accepted
doctrines. The old opponents of Marxism, both open and
covert, took heart and mustered again in battle array.
Most of them, however, changed their weapons : They
threw away the old stock arguments of the old and discarded
theoretical arsenals which had become obsolete and useless,
and had therefore been left to rest and rust, and took up
the more modern weapons of the Revisionists. Hence, the
Revisionist hue of all latter-day anti-Marxian literature.
The most important of the writers to be considered, be-
sides those already mentioned, are: Werner Sombart, Th.
G. Masaryk, Paul Earth, Rudolph Wenckstern, Franz Op-
penheimer, Ludwig Woltman, Tugan-Baranowsky, and Jean
Jaures. Another Revisionist whose writings, although of
little intrinsic value, arrest our attention by the peculiar
reflection they cast upon Revisionism, is Dr. Alfred Nossig,
the only man who attempted to raise Revisionism to the
dignity of a system.
According to the manner in which they treat thq subject,
the Marx-critics may be roughly divided into three classes : / \
First, the philosophers, who dwell principally on Marx's v \U
philosophic system; secondly, the economists, who examine (Sj
l6 THE THEORETICAL SYSTEM OF KARL MARX.
his economic theories; and thirdly, the sociologists, that is
to say those who concern themselves chiefly with Marx's
theories of the laws which govern the development of the
capitalistic system of society. That does not mean that this
division is in any way strictly observed. To begin with,
there are those who, like Bernstein, treat of all the three
J subdivisions of the subject, although separately from each
other. Then there are those who, while making one of the
divisions their chief topic permit their discussion to overlap
into the other provinces.
In order that the reader may have well in mind during the
following discussion the co-relation of the different parts of
the Marxian system, and particularly the inseparability of
his " philosophy " from his sociology and economic theory,
properly so-called, a brief outline of the system is herewith
given :
" In making their livelihood together men enter into
certain necessary involuntary relations with each other, in-
dustrial relations which correspond to whatever stage so-
ciety has reached in the development of its material produc-
tive forces. The totality of these industrial relations consti-
tutes the economic structure of society, the real basis upon
which the legal and political superstructure is built, and
to which definite forms of social consciousness correspond.
The method of producing the material livelihood determines
the social, political and intellectual life- process in ^iieral.
It is not men's consciousness which determines their life;
on the contrary, it is their social life which determines their
••iousness.
" At a certain stage of their development the material
productive forces of society come into conflict with tl
conditions of production, or, what is its legal expn
with the old property relations under which th«
have hitherto be< 1. From forms of development
of the productive forces these relations turn into f
of production. Then begins an epoch of social revolution.
KARL MARX AND HIS LATTER-DAY CRITICS. 17
With the change of the economic basis the whole vast super-
structure becomes slowly or rapidly revolutionized."
At any given stage of the development of society based
on the private ownership of property that social class which
owns the tools of production then in use dominates that
society politically. When the material productive forces
of society come into conflict with the old conditions of
production, a new class has arisen in that society, which
disputes the political supremacy of the old dominating class,
the class which owns and controls the new material pro-
ductive forces, and a struggle for life and death then en-
sues between these two classes. In this struggle the new
class invariably comes out victorious. In the social revolu-
tion which follows the victory of the new class the new ma-
terial productive forces are unchained and are given free
scope to assert themselves, and the new class, controlling
these forces, becomes politically supreme.
" A form of society never breaks down until all the pro-
ductive forces are developed for which it affords room.
New and higher relations of production are never estab-
lished until the material conditions of life to support them
have been generated in the lap of the old society itself,
,Therefore mankind always sets for itself only such tasks
(as it is able to perform; for upon close examination it will
always be found that the task itself only arises where the
material conditions for its solution are already at hand or
are at least in process of formation.
" The industrial relations arising out of the capitalistic
method of production constitute the last of the antagonistic
forms of social production; antagonistic not in the sense
of an individual antagonism, but of an antagonism growing
out of the social conditions of individuals. But the pro-
ductive forces which are developed in the lap of the capi-
talistic society create at the same time ttte material condi-
tions needed for the abolition of this antagonism. The cap-
italist form of society, therefore, brings to a close this pre-
lude to the history of human society."
l8 THE THEORETICAL SYSTEM OF KARL MARX.
The material conditions needed for the abolition of this
antagonism have matured in the lap of the capitalistic sys-
tem itself by the time it has reached that stage of develop-
ment when the material productive forces come into con-
flict with the old conditions of production, and these con-
ditions of production have become obstacles in the way of
production and lead to social revolution.
The breakdown of the capitalistic system of produc-
tion leading to social revolution will be brought about by
the inherent contradictions of the capitalistic system of
production itself. \
^The laws which govern the capitalistic form of pro-
duction will ultimately lead to the extinction of the middle
strata of society as independent, property-owning, classes,
and divide society into two classes 7)the very small minority
owning all the wealth of societyJahd the large mass of the
people, the working class, who own nothing, not ^yen their
own bodies if they want to keep from starvation/ At the
same time the development of machinery will continue to
throw more and more workingmen out of employment and
make the share of those workingmen who are employed in
ihe product produced by them grow continually smaller.
[The productive forces of society will not only become fet-
\tercd, so that they will largely have to remain idle, but even
that portion which will not remain in enforced idleness will
be able to produce only with tremendous accompanying
waste and convulsive interruptions, until finally, a point will
be reached when, by the very conditions of capitalistic pro
duction, because of the large portion of the working class
out of employment and the small share of the goods pro-
duced by them received by the employed workingmen in
return for their labor, there will accumulate such an enor-
mous mass of goods which the capitalists will be unable to
dispose of, that is to say find a market for, that production
will have to be indefinitely suspended, unless a new basis
of production be found?)
Meanwhile the discontent of the working class has been
KARL MARX AND HIS LAITER-DAf CRITICS. 19
growing, and the sense of the injustice done to it accumu-
lating. It has developed a code of ethics of its own. Hav-
ing no property themselves the workingmen have lost all
sense of the sacredness of private property. Most prop-
erty being owned by corporations having " no body to be
kicked and no soul to be damned," they fail to see the
necessity of private ownership or the usefulness of private
owners. They have nothing to lose, and they have grown
bold. They have forgotten their duties to their families, .
for which they can do nothing and which are, for the most /
part, their independent co-workers instead of dependents,
but their sense of duty to their class has been constantly
growing upon them during the long period of struggle pre-
ceding the final encounter.
The working class has been organized by the very proc- >/
ess of capitalistic production and exploitation. It has been
educated to understand its own powers and possibilities. It
is animated by the world-historic mission devolved upon
it. It contains within its own ranks all the elements neces-
sary for conducting the production of society on a higher
plane, so as to utilize all the productive powers of society.
The mechanical development of productive forces requires
production on a large co-operative basis. The working
class takes possession of the social machinery, and the real
history of human society begins — the co-operative com-
monwealth. \
CHAPTER II.
MATERIALISTIC CONCEPTION OF HISTORY AND CLASS STRUGGLE.
One of the most amusing features of modern Marx-
criticism is the grave discussion by the critics, of the ques-
tion whether or not Marx was a philosopher and whether
or not Marxism is a philosophy. Most divergent and con-
tradictory opinions are current among the many eminent
and learned critics. And not only this but the most contra-
dictory accounts are given by them as to what Marx himself
thought on the subject. The confusion is so great that
there seems to be no way out of it, — unless one turns to
Marx himself, or to Engels. . . . This, by the way, is
always the best way out when one finds himself in one of
the mazes of contradictory accounts of Marxism which
so abound in anti-Marxian literature.
A careful study of the writings of Marx and Engels
oscs the fact that in their opinion what used to be
known before their day as " philosophy " reached its cul-
minating point and came to a close with Hegel; that
henceforth the place of philosophy is taken by science. Al-
rrady Lmlwig Foucrbach said: — "My philosophy is — no
philosophy." and Marx and Engels carried this statement
into effect by replacing abstract philosophy by concrete
ice. Engels therefore says:1 "This conception (the ma-
terialistic conception of history) puts an end to philosophy
on the historical field, just as the dialectic conception of
nature makes all natural philosophy unnatural and impos-
sible." Marxism is no abstract philosophy. It is just the
ederick Engrls, Ludwig Feucrbach und dcr Ausgang dcr Klawischen
deuUchen Philotophic. Stuttgart, 1895.
2O
HISTORICAL MATERIALISM AND CLASS STRUGGLE. 21"
reverse, it is concrete science, and therefore the heir and
successor of all philosophy.
It is heir to all philosophy, because notwithstanding the
break with the old philosophy which the new method of
treating human society has effected, and the superceding of
philosophy by science, there is a continuity of thought run-
ning through philosophy and the science of human society
just as there is a continuity of human society itself not-
withstanding the changes in the form of its organization,
or just as there is continuity in the economic structure of
human society notwithstanding the different " economies "
which were prevalent at different stages of its development.
The Marxian science is the result and logical sequence
of the whole development of mankind. Marx found await-
ing him the component parts of his philosophy: the dialectic ^s/
or evolutionary method of contemplating the world, and
the materialistic view, the view that the material conditions
of the world being the only thing we know are therefore the
only thing we can take cognizance of. His was the new
combination and the method of application which, however,
were loudly demanded by the needs of the time.
In order, however, that we may come unbiased to the
study of this science which is variously known as " eco-
nomic materialism," " dialectic materialism," or " The Mate-
rialistic Conception of History," we must rid ourselves of
some prejudices which cling to the name because of the
association of the words which represent the ideas forming
its component parts, in vulgar parlance, with certain ob-
jectionable moral and mental qualities. Dialectics is com-
monly associated with a certain mental trick by which a
shrewd debater seemingly proves something which may
be quite untrue ; the reasoning by which the proof is pro-
duced contains a mental shuffling of cards. It is sometimes
used in the same sense as " sophistic,"— another much-
abused term. But worse yet are the vulgar associations of
materialism. A materialist is commonly supposed to be a
man who is gross, mean and egotistical. A materialist phi-
J
22 I1IK THEORETICAL SYSTEM OF KARL MARX.
losophcr. according to the common notion, is a man whose
ideas are chained to the gross pleasures of life, who always
has his eyes open to the main chance; a man who has
neither God in his thoughts nor humanity in his feelings;
a man to whose constitution any " ideal " or " higher "
motive is an absolutely foreign element.
This is, of course, fallacious. Philosophic idealism or
materialism have absolutely nothing in common with the in-
fluence of, or adherence to, ideal motives in practical life.
Idealism or materialism in philosophy is simply the ques-
tion whether we must go beyond the world that we perceive
with our senses in order to get to the real world, .that is to
say, to the world which has a full and independent existence,
and therefore contains in itself the laws of its own exist-
ence and development. The idealists or at least those of
them who are consistent insist that the world of matter
which surrounds us and includes us has no independent
existence at all; that certain non-material things, or ideas,
are the only things having an independent existence, and
therefore their own laws of development; and that the ma-
terial world merely follows the development of those ideas,
of which it is the shadow or manifestation. The mate-
rialists, on the other hand, declare that the only real world,
for us, is that material world which we perceive with our
senses; that, furthermore, we know nothing beyond what
knowledge we gain by the help of our senses, that ideas
have not, and can not have any real independent existence,
but are merely the reflection of the material world as per-
ceived by us through the medium of the senses.
This is something different, and apart, from the precon-
1 notions of idealism and materialism. It is now easy
to understand that the fact that one is a materialist in his
philosophic views cannot possibly prevent him from, or have
any bearing upon, his being an "idealist" in practical life.
Nor is this changed by adding " dialectics " to materialism,
that is to say by transferring the discussion to the histor-
ical field, because that is all that "dialectic method" really
HISTORICAL MATERIALISM AND CLASS STRUGGLE. 23
means. In other words it simply means that we do not
look at the world as something dead and unchangeable, but
as something which is continually changing; as the great
Greek philosopher who first saw this great truth expressed
it: nothing is, everything becomes; or, to be more exact,
existence is a constant process of change or growth. If
we want to understand things we must understand their ap-
pearance and disappearance, their growth and decline.
This way of contemplating things in their movement, of *^
studying their birth, growth and decline, when applied to the
study of the history of human society by a materialist, that
is to say by one who knows that only material facts exist
and develop independently, and ideas only reflect the exist-
ence and development of the material world, — is the Ma-
terialistic Conception of History, the foundation of the
Marxian Scientific System. ( In other words, the Material-
istic conception of history maintains that the evolution of
human society as a whole, and that of all human institu-
tions, is not, as the idealists insisted, the result of the \,
changes in men's ideas relative to the society they were liv-
ing in and its institutions, which changes are brought
about by the inherent law of development of the ideas;
but that, quite to the contrary, the development of society,
including men's ideas of human society and institutions, are
the res'ult of the development of the material conditions •
under which men live; that these conditions are the only
ones which have an independent existence and development;
that the changes of the material conditions cause the in-
stitutions of human society to be changed to suit them ; and
that the ideas on all subjects relating to man in society,
including those of right and wrong between man and man
and even between man and his God, are changed by man
in accordance with and because of, those changed material ^
conditions of his existence.)
As was stated before, both the component elements of
this philosophy, the materialistic " view " and the dialectic
" method," were found by Marx ready to do service, and his
24 THK THEORETICAL SYSTEM OF KAKL MARX.
great merit in this field was the combination of the two,
and the reduction of the combination to a clearly defined
system.
This, however, was not all, and perhaps not even the
most distinctive contribution of Marx to philosophy-sci-
ence. The mere statement of the philosophic doctrine still
left the course of human history unexplained, until Marx
/applied his genius and transformed history, a sealed book
to his predecessors, into a science. A science which, if not
as exact, is just as useful, as any one of the exact sciences.
This he achieved by abandoning abstract speculation and
treating history scientifically. That is to say, he examined
history itself for the facts, in order to obtain from such
examination the laws of their evolution and relation to
each other. This was strictly in accordance with his mate-
rialistic " philosophy " which would not admit of any out-
side preconceived constructions, and insists that we get all
our knowledge and ideas from the existing " matter " it-
self.
ylis "Materialistic" conception gained, the next thing
for Marx to do was to determine what were the " material "
factors of history. I His investigations led him to the l>c-
ylief that the economic conditions were the prime movers of
history. Accordingly, he found it necessary to substitute
the term " economic " for the term " material. 7 This com-
pleted Marx's conception of history and gave it that dis-
tinguishing characteristic which stamps it, and the whole
of it, as truly Marxian, notwithstanding the many claims
of priority; that characteristic which at once gives it its
scientific value and makes it the butt of all pseudo-scientific
criticism.
The great merit of this theory of history, is — that it
really explains the -course of history, something which could
not be said of the previous attempts at explaining hi
including those of " materialists " like Taine and Buckle.
Marx's insistence on the predominance of the economic
factor is not the result of any arbitrary predilection or any
HISTORICAL MATERIALISM AND CLASS STRUGGLE. 2$
preconceived schematic explanation brought into the study
of history from outside considerations. The economic fac^
tor is insisted on as THE material factor because it is the
only material factor that -changes and develops, and conse- ^
quently is the only one which can cause change and devel-^'
opment in what Marx calls the " superstructure " of society.^
It goes, of course, without saying, that something that does
not change can not produce any change. No mathemati-
cian has ever attempted to ascribe the change in the result
of a mathematical operation to the factors that remain con-
stant. It is the varying factors that produce changes in the
result. But all the material factors that have been men-
tioned beside the economic factor remain constant, or nearly *->
so. Such are race, geography, etc. To the extent, how-
ever, that these factors do change, and by their , change
affect the course of human history, full credit is given them.
So in the study of primitive, undeveloped, society, where,
owing to the crude character of his tools, man is dependent
entirely upon nature and is directly affected by its least
changes, or where, as in the case of great discoveries, cer-
tain geographical features hitherto of no importance be-
come important, these factors are fully recognized and their
influence carefully studied and determined.
In other words, all the material factors, outside the eco-
nomic, are " taken into account," except that upon careful
account taken the influence of these factors appears to be
very small and tributary to the main, the economic, fac-
tor; and, (and this is most important of all) this influence
is constantly diminishing with the progress of mankind.
They may, therefore, be left out of account when outlining
thevgeneral scheme of the evolution of society.
The adherents of the Materialistic Conception of His-
tory therefore assert that production, and, next to produc- /"
tion, distribution of the product, is the basis, of every social
order ; that in every historic form of society the division
of the product of human labor produced by it, and with it
the social arrangement into classes or estates, depends on
26 THE THEORETICAL SYSTEM OF KARL MARX.
what and how is produced in that society, and how the prod-
uct is exchanged. ^ Accordingly, the last causes of all
* social changes and^fclitical transformations are to be sought
not in the increasing insight of men into the laws of eter-
nal truth and justice, or some similar " ideas," but in the
changes of the methods of production and distribution — not
v in the philosophy, but in the economics of the given epochA
They are not to be sought in morality, because morality itv
self is changeable and is itself the result of circumstances
which lie deeper in the structure of human society, f" Every
moral theory which has existed until now was, in last analy-
sis, the result of the economic conditions of the society in
which it prevailed. The awakening insight that the existing
social arrangements are unreasonable and unjust, that reason
became nonsense and charity torture, is only a sign of the
fact that the methods of production and forms of exchange
have been quietly undergoing such changes that the social
arrangements which have been cut to suit previous eco-
nomic conditions are now out of joint. It also betokens that
the means of remedying the discovered evils have already
to a more or less degree been evolved with the changed re-
latjpns of production."
frhe basis and superstructure of society of which Marx
speaks in his famous preface to his " Zur Kritik," a portion
of which was quoted in the preceding chapter, may there-
fore be formally constructed on something like the follow-
ing plan : VThe basis of the structure is a given state of the
development of the productive forces of society) this brings
about certain relations between the individuals com-
posing that society in the social process of production and
distribution, which determine the division of the product
among them ; this, in its turn, results in a certain form of
society, certain social institutions, which express tl
relations; the society is then permeated by a condition of the
minds and a set of habits and customs which conform to the
social forms of that society; and ali this culminates in the
philosophy, literature, and art of the society which will he
HISTORICAL MATERIALISM AND CLASS STRUGGLE. 27
the result of the abilities, the tastes, and inclinations which
this condition of the minds, the habits and customs will pro-t/
dwce.
(jThe ideas which prevail in a given society exert a power- ^.
ful influence on that society. These ideas, however, have
their source in the social milieu of that society, which
milieu, in its turrK is the result of the economic relations
of that society.^ (The ideas, therefore, whether political,
moral, religious; W otherwise, which prevail in a given
society, and which influence the conduct of men in that
society while they prevail, cease to prevail, and are grad-
ually discarded, when the economic condition^ in which
they had their inception undergo a change.^ Furthermore,
in our society, which is divided into classes based on eco-
nomic interest, the ideas prevailing in it at any given time
will not only be the result of certain economic conditions,
but will in the main answer the needs, desires, or aspira-
tions, of some social class which was brought to the front
by those economic conditions/) So that there may be, and
very often there is, more than one set of ideas current in
a given society at the same time ; that these ideas may be in
direct conflict with each other);* and they are held, respec-
tively, by those classes of that society whose interests they
giye expression to. j
I Usually there is only one set of ideas prevailing in so-
ciety, and for the following reasons:/ In our society, that
is, a society based on the private ownership of property,
there is always a class of persons having in their possession
or control the means wherewith society produces the things
on which it subsists and from which it derives its comfortJ
(This class, by reason of its control of society's means -61
production, carrying as this does with it the management
and supervision of society's production and exchange,
shapes the institutions and customs of society to suit its
interests and to insure its dominion in society. It has ab-
solute sway except that it must not disregard the law of
its own existenceTj That is to say: its dominion must be
^ V .,
28 THE THEORETICAL SYSTEM OF KARL MARX.
exercised in conformity with and in furtherance of the
economic powers which created it, giving them full play,
so that their latent forces may fully develop and give to
S9ciety all the benefit there is contained in them.
' This dominion of the class which controls the production
or society is due not only to the coercive power it posesses
over the other members of society^ by reason of such con-
trol, and of the control of society's means of subsistence
and comfort which result therefrom,(but also to its persua-
sive powers. | From the standpoint of interest it must be
admitted that its interests lie along the road of the progress
of society,/and therefore coincide with the interests of so-
ciety as a whole. From the higher, " ideal," standpoint
its position is also impregnable: what it obtained by might
has in due course of time become its right by the rule of
prescription, (euphoneously known as "tradition,") the
greatest and most potent source of right, as it requires no
evidence of title and works itself into the very inner con-
sciousness of man and becomes co-extensive with his feel-
ings. (To help and augment this natural feeling of its right,
the dominating class, which controls the spiritual food of
society along with the material, inculcates the ideas of its
rights into the members of society artificially^)/ So that the
whole of society is usually permeated witn the ideas of
tlu- dominating class.)
But " the world do move." 1 Man, in his struggle with
nature for its domination, is ver^ inventiv^. (His inventive-
ness (its tempo) will depend on many circumstances, but is
almost continual, resulting in an almost constantly progress-
ing change of the tools wherewith he exploits nature!) With
the change of tools he changes the methods, and sometimes
the field of his exploitation. The change does not, however,
come suddenly. (The new, improved, tools, and the new
methods which tney bring with them, are being slowly per-
1 and brought into use, and slower, still are the new
fields of exploitation becoming popular. MUit the march of
the new economic force embodied in the new tool is irresisti-
f:
HISTORICAL MATERIALISM AND CLASS STRUGGLE. 2p
ble.jSlow though its progress be at first, it gains in velocity
and/momentum as it proceeds onward, like the falling stone,
until its slow progress is converted into a rushing torrent
sweeping along in its course all obstacles?)
/When a new tool makes its appearance, a new political *
force is born into society. ] This force grows with the
growth of the importance of the new tool in the economy
of society, and, in its turn, helps the new tool to unfold
itself properly, if it is hampered by artificial barriers from
asserting itself. /This new political force, the class which
owns and controls the new tool, and consequently the prod-
uct which is produced by means thereof, enters into a ;
struggle with the then governing class,\ that is with the
class which owns and controls the old m/eans of production^)
and this struggle for the control of the organization of so-
ciety grows from day to day with the growth of the use of
the new tooll"' Each recruit to the new field of economic
activity becomes a soldier in the army of the class controllL j
ing that field.
[ This struggle continues until the inevitable result is
reached: Economically, the new improved means of obtain-
ing society's goods becomes pre-eminenK /politically, the
class which operates and controls those nmproved means
of production becomes predominant. yThen a new order of
things is created; if the new method^of production is suffi-
ciently different a new society is born\ new political in-
new religious beliefsr new ^riioz al notions^ new
^Jw^philosophic sjyjstems. fSo_does History
. /The new of yesterday \s the ol^ of to-
5WX)i
^_ / I0£aj
aesthetic tastes, new^philosophic systems. rSo_does History
day, and the new\>f to-day is the old of to-morrow.)" Each
order of things is in turn young and old; struggling for
existence and recognition first and then struggling for ex-
istence and the maintenance of its authoritative position
against the recognition of,new elements which threaten to
undermine its existence. /The progressive of to-day is the
reactionary of to-morrow^.
In this struggle for ^existence between two economic
3O THE THEORETICAL SYSTEM OF KARL MARX.
forces and the two classes of society representing them, for
social dominion, force as well as persuasion is usually
used,) the manner and proportion of their use being deter-
mined by local influences. / The established opinion, whether
born of interest (class-interest) or received by tradition ex-
erts a powerful influence on society as a whole, as already
stated, until the new economic forces become strong enough
to formulate their own set of opinions, their own " ideol-
ogy," and inculcate them into the minds of men.) The new
ideas formulate slowly, and make converts even more so.
But when the time has come, society has become sufficiently
evolutionized economically, these ideas become a revolu-
tionary factor in themselves and help destroy the old or-
der of things.) \£Jot only is the class whose interests lie
in the economic changes which gave birth to these ideas
fired by these ideas to such an extent that it often forgets
those economic: interests themselves and is carried away by
the ideas alone/ but neutral classes of society and even peo-
ple whose interests lie in the opposite direction are carried
away by the new ideas and enter the lists for the new order
of things. And this for the reason that the new ideas are
always the reflection of the economic changes which lie
along the progress of society as a whole.
New ideas, therefore, are always the result of new eco-
nomic conditions, produced sometimes directly and sometimes
indirectly; but they always have an important place in the
struggle of the classes for the progress of human society, for
each new class fights for society as well as for itself.) They
truly characterize the social forces engaged in the struggle. \
CHAPTER III.
THE MATERIALISTIC CONCEPTION OF HISTORY AND ITS CRITICS.
The first of the objections to the Materialistic Conception
of History advanced by the Marx-critics which we will con- '\ J /
sider here is the so-called /philosophic" objection?) We A;*/*/'
will consider it first because of its great pretensions and
because of its old age, it being in reality merely a new edi-
tion of the old idealistic philosophy with which Marx had
to deal as far back as 1845. In its pure, idealistic form
Marx squared his accounts with it in his own masterly
fashion in his book " Die Heilige Familie." The account
was settled, the balance was struck, and no more was heard
of idealism. It now re-appears bashfully under cover of
a scientific theory of cognition and psychology. No mat-
ter what its garb, however, it is essentially the same, ex-
cept that with the loss of its purity it has lost its logic. Pure
idealism, as represented by Hegel, for instance, is logically
a perfectly constructed edifice. It rests on false founda-
tions. But its premises admitted, its logical construction is
impregnable. Not so with modern " philosophy." It is
idealistic without the logic of the finished idealistic struc-
ture. What is worse, however, it is reactionary, which is
not necessarily an attribute of idealism. Desiring to avoid
the logical consequences of the development of philosophy,
in which the idealistic system of Hegel must inevitably be
followed by the materialism of Marx, its watchword is:
" Go back." And the further back the better. ... So
that we find Weisengruen, a leading light among these
philosophers, throwing loving glances at Berkeley, who
was perhaps as much of an idealist as Hegel himself, but
32 THE THEORETICAL SYSTEM OF KARL MARX.
utterly devoid of the historic sense which made Hegel a
truly great philosopher and his system a great step forward
in the development of philosophy.
Indeed, their aversion towards anything that has some
historic sense leads Weisengruen, otherwise a sane and
bright thinker, to declare that the real force that makes
History is the imagination or phantasy (Phantasic). To
use his own words : " Phantasy is the demi-urge of all
History. . . . Not the developed intellect, but the ele-
mentary phantasy." x A discovery which is worthy to rank
with that of the charlatan Nossig, who, after posing as a
great scientific Marx-critic, gravely announced, with all the
pomp of pseudo-science, that he discovered a remedy to all
our social evils in the old Jewish custom of the Jubilee.
We cannot, however, go here into the details of the
philosophic objection and its numerous variants. Such dis-
cussions are only intended by their authors for German pro-
fessors and such others as enjoy the perusal of bulky vol-
umes. Under no circumstances are they meant for people
who have no time to spend on the verbiage of metaphysical
speculation. We will simply say, therefore, that the sum
and substance of all these arguments amounts to this: That
there is no way in which material conditions can be shown.
philosophically, to turn into ideas; consequently, that ideas
cannot be the result of economic conditions; and that,
therefore, the existence of ideas and their influence on
History not being denied, economic conditions cannot be the
prime movers of History.
The answer to all of which is, again without going into
long and abstruse philosophic discussions, that, as Engels
puts it, the proof of the pudding is in the eating; that if we
can prove by historic data that the development of ideas
did follow the development of economic conditions then we
need not worry over the " philosophic " question of how the
transformation was accomplished. It will then be the
1 Paul Wcisengruen, Der Marxismus und das Wcsen dcr sozialcn Frage.
Leipzig, 1900.
MATERIALISTIC CONCEPTION OF HISTORY. 33
business of " philosophy " to take care of itself and sHaw
how it was done or frankly confess its impotency. It is
clearly a case of those philosophers' own funeral.
It is true that the learned philosophers, in the person of
Professor Masaryk,1 strongly object to the introduction of
such vulgar " matters " as puddings into the discussion of
such lofty subjects. But the loftiness is all theirs, and we
who do not soar in the realms of phantasy can very well
afford to stick to the gross " material " facts. We, there-
fore, claim, with Engels, that the proof of the materialistic
conception of history is to be looked for in history itself.
But when it comes to actual history, these philosophers
must admit that the facts, or at least a good many of them,
happen to tally with the " unphilosophic " Materialistic Con-
ception of History. So says Weisengruen himself:
" For certain historical relations within certain periods of
time this historical theory (The Materialistic Conception
of History) is a relatively correct, practical, explanatory
principle (Erkldrungsprincip} . We can, for instance, by
its aid drag out from historical obscurity the more hidden
economic forces which propelled the French Revolution.
We can, by its aid, I am convinced, throw more clear and
glaring light on the period of decline of the Roman Empire,
than could be done until now. Many phases of the Ger-
man middle ages may be understood by us with the aid of a
mild economic motivation. The powerlessness of the Ger-
man Bourgeoisie, particularly during the year 1848, may
be partly explained by purely economic causes."
As the reader will see, this great opponent of Marxism,
who in another place of his book insists that Marxism
must be thrown overboard, bag and baggage, is willing to
concede quite considerable to the Materialistic Conception
of History. In fact, he has nonchalantly conceded almost
all of European History since the beginning of the Christian
Era (the breaking up of the Roman Empire, the German
1 T. G. Masaryk, Die philosophischen und sociologischen Grundlagen d€3
Marxismus. Wien, 1899.
34 THE THEORETICAL SYSTEM OF KARL MARX.
middle ages, the French Revolution, the German Revolu-
tion), with the exception of the Renaissance, which he spe-
cifically exempts from the influences of material condi-
tions and reserves it, supposedly, for " higher " influences.
He then draws the general conclusion that some relations
(" Zusai)nncnJiange") and periods may be treated according
to the Materialistic Conception of History, and others may
not. Curious as it may seem for a philosopher to arrive at
such half-way conclusion about a purely philosophic mat-
ter, it is even more curious to observe that this same phi-
losopher and critic, instead of following up his conclusion
by an examination of the provinces and periods in which the
Materialistic Conception of History does apply and in which
it does not, turns around and declares that as far as we can
see, there are no historical laws at all, and that it is prac-
tically impossible to write or treat history scientifically ;
in short, that there is no historical science. This Nihilism,
which, as we have said, is the last recourse of the oppo-
nents of Marxism if they want to keep at least the show of
being scientific, is very significant, as we meet with it not
only in the province of philosophy of history, but all along
the line of sociology, including political economy, as we
shall see later.
But it is not only the Nihilists among the Marx-critics
who do not follow up their criticism with the only decisive
proof, that mentioned by Engels, the proof of history. In-
stead, they indulge in generalities; such, for instance, as: —
Marx gives " undue " " prominence " to the material factors
and disregards factors which ought to be considers 1.
pressions that mean absolutely nothing, because of their
indefiniteness, and are absolutely incapable of verification,
by any method, except, perhaps, the " subjective " one of
everybody deciding for himself, according to his fancy.
which factor got its "due," and which did not.
The slowness on the part of Marx-critics to talk more
definitely is not due to any desire to be brief. These g
tlemen are usually quite voluble. It is simply a case of dis-
MATERIALISTIC CONCEPTION OF HISTORY. 35
cretion. Whenever they do say something definite it can
easily be shown that either the historic facts do not bear out
the critics or that Marx never said the things attributed to
him. It seems that most oft»the critics of Marxism suffer
with a singular malady which may be termed, " Confusion
of Terms and Ideas," which makes them attribute to Marx
and his disciples all sorts of things which neither Marx
nor his disciples said or could have said, as appears plainly
from their writings, with which these critics are very fa-
miliar. So do, for instance, Professor Earth,1 Weisengruen
and others, make what they evidently regard as a very
strong point against the Materialistic Conception of His-
tory by showing that the changes in the technical develop-
ment of the means of production can not, alone, explain all
the facts of History. In' this they are undoubtedly right.
But, — and there is the rub, — the Marxists never claimed
any such thing. The assumption that the Marxists do claim
such a thing evidently rests on the confusion by the critics
of the terms " economic conditions," usually employed by the
Marxists with the term " technical development." A con-
fusion which does not do much credit to the faculty of dis-
crimination possessed by these gentlemen, and which seems
most surprising in such acute and astute thinkers.
It seems peculiar that such a simple matter should require
long explanations. But all Marx-critics seem to be so much
affected by the disease referred to, that it is pretty dan-
gerous business to take it for granted that they are able
without outside aid to see the most obvious distinctions and
differences. Be it therefore said here for the Nth time, that
while changes in the technical development of the means
of production usually go together with changes in the ma-
terial conditions of the people, they do not necessarily so
go together and are separate and distinct from each other.
While the technical developments in the means of produc-
tion and distribution are the chief cause of changes in the
1 Paul Earth, Die Philosophic der Geschichte als Sociologie. Leipzig,
1897-
•J
J
36 THE THEORETICAL SYSTEM OF KARL MARX.
material conditions of the people, they are not always so
and not necessarily so. There are other causes which
may affect the material conditions of the people, and there
are changes in the technical part of production and dis-
tribution which do not at all affect the material conditions
of the people. And the Marxists claim that it is the
changes in the " material conditions " that are the prime
movers of history, no matter what the causes of these
changes may be. The technical development only affects
the course of history indirectly and only in so far as it
causes changes in the material conditions under which peo-
ple live and work.
The same malady, — Confusion of Terms « and Ideas, —
is the cause of another great objection to the Materialistic
Conception of History. This is advanced with great
hemence by most critics of an " ethical " bent of mind,
among others, by the well-known English socialist, E. IU-1-
fort Bax. It is to the following effect: People do not al-
ways act out of self-interest. They are very often swayed
by ideal motives and then act quite contrary to their own
interests. Hence, the fatal error of the Materialistic Con-
ception of History in making the " material interests " the
prime movers of History.1
This objection has been partly answered already in a
preceding chapter, where it was pointed out that the Ma-
terialistic Conception of History has nothing to do with
the question of individual idealism. That it was not a
theory explaining the motives which impel individuals to
act, but a historical theory explaining the motive powers
which bring about those actions of the masses, tin- aggre-
gate of which make tip what we call history; the powers
which are the "causes of the causes" of individual action.
A man may very well act against his own interest, even
sacrifice his life, for the sake of an ideal, and yet his ac-
Belfort Bax, Die Materialistische GeschichtsanfTasstinK, in Die Zeit
(1896). Synthetischc contra Ncumarxistische Geschichtsauffawung.— Die
Grenzen der Materialistischen Geschichtsauffassung, in Neue Zeit (1*97).
MATERIALISTIC CONCEPTION OF HISTORY. 37
tion may be the result of the material interests of a class
or group to which he belongs or which produced that ideal.
For example: The ruling class of Japan needs new mar-
kets for its expanding industries. Russia is in its way be-
cause the ruling classes of Russia for some reason or other
need the same markets. Japan and Russia go to war for
the control of these markets. This begets a high patriotic
fever in both countries, and thousands and tens of thou-
sands of people sacrifice their lives willingly for the high
ideal of " My country forever." Among those thousands
there are very few who are directly " interested " in the
issue of the war, and even these would probably never give
away their lives for those <" interests " if it were put up to
them as a mere business proposition. Most of those who
will sacrifice their lives in this war for the " honor " of their
country will be people who have no " interest " in the war,
who may be even affected injuriously by the war, but they
sacrifice their lives for the high ideal born and begotten
of the interests of their class, or of the ruling class under
whose moral and intellectual tutelage their class stands.
While the actions of the individual participants in the war J
are, therefore, the result of ideal motives, the historic event V
itself, the war, is the result of material interests, which are
in their turn the result of economic conditions.
Aside from the confusion, however, between the mo-
tives of individuals and the motive powers of History, this
objection also rests on the further confusion of " condi-
tions " with " interests." The Marxists never claimed that
material " interests " control the course of History. They-
always use the expression, " material conditions " in formu-
lating their theory ; and material conditions are something
entirely different from material interests. Material condi-
tions usually beget material " interests," which shape the
course of History, but not always and not necessarily so.
Sometimes material conditions will bring about historical
phenomena which are not the result of any " interest " in
38 THE THEORETICAL SYSTEM OF KARL MARX.
the usual sense of that word, but merely of the condition
itself. Karl Kautsky in a discussion with Belfort Bax used
this example: The turning away from all earthly interests,
the longing for death, of early Christianity may, — he says
— very well be explained by the material conditions of the
Roman Empire at that time. But it would, of course, be
monstrous to attribute the longing for death to some ma-
terial interest.
If the learned critics would only carefully refrain from
substituting other terms and ideas in place of those used
and expressed by Marx and his disciples a good deal of
their criticism would fall of itself, and the rest could easily
be answered. So, for instance, would a careful reading of
Marx and a clear comprehension of the terms used by him
do away with all the objections which admit that the eco-
nomic factor plays an important role in history but think
that " too much " is claimed for it, and that other factors
are " not taken intb account."
So do most of the critics talk of Marx's failure to " take
into account " such things as human nature, race, geography,
etc. Those of our readers who have read carefully the
preceding chapters will have seen that these things have all
been "taken into account"; and that when the Marxists
still insist upon the economic factor as the determining fac-
tor of historical progress it is because this factor is the only
one which accounts for the movement of history, the prog-
ress of the human race from one state to another, as all the
other factors are comparatively stationary, and could there-
fore account perhaps for a condition of the human race but
not for its Progression.
That it was not any failure to " take " these things " into
account " that led Marx to proclaim the economic factor as
the material factor which moves history, a mere cursory
reading of Marx will show. In his work on Capital, he
says:
" Aside from the more or less developed condition of so-
cial production, the productivity of labor depends on natu-
MATERIALISTIC CONCEPTION OF HISTORY. 39
ral conditions. They are all reducible to the nature of
mai1, himself, such as race, etc., and his natural surround-
ings. The outward natural conditions can be divided, eco-
nomically, into two great classes; natural wealth in the
means of subsistence, such as richness of soil, fish-abound-
ing waters, etc. ; and natural wealth in means of produc-
tion, such as usable water-falls, navigable rivers, woods,
metals, coal, etc. In a primitive community the first class
of natural wealth is of paramount importance, on a higher
plane of civilization it is the second class that is the most
important."
To insist after this on the " technical development " being
the only historical factor recognized by Marxists would
se-em absurd. But Marx critics are a peculiar race. There
is nothing that they cannot do, or at least say. From what
was said in the preceding chapters it would seem clear that
Marx and his disciples not only recognize the influence of
ideas, but accentuate it, and that in their scheme of the
transition of the capitalist system into socialism, ideas play
a distinct and quite important role. And yet most of the
critics still tell the old yarn of the Marxists not admitting
the influence of ideas. Furthermore, they are not a bit
abashed when they are shown by quotations from Marx that
he thought just the other way. When they are caught
" with the goods on," they very coolly declare that Marx
is contradicting himself. That is, the Marx of " Capital "
and his other well-known works, is contradicting the Marx
which they put up for their readers' delectation. Indeed,
lately this business of " refuting Marx by Marx " has de-
veloped into a special industry, which would contribute a
good deal to the gayety of nations if they were only in the
mood for it. As it is, the " nations " which read these
things are worried too much by the subject-matter to be
amused. It will, however, be amusing to^our readers, and
we shall attend to these " contradictions " in due time. We
must, however, defer this treat until the time when we will
come to consider the Marxian system in its entirety, as a
4O THE THEORETICAL SYSTEM OF KARL MARX.
reward to our readers for their patience. Besides, it will
then be better appreciated. Here, we will mention only one
as an example:
The Russian critic Ludwig Slonimski finds this contra-
diction: Marx, — he says — put up the theory that eco-
nomic and class interests are the only motives of the politi-
cal and legislative activity of the State, and yet he himself
tells us of the praiseworthy activities of some factory in-
spectors, particularly Leonard Homer, who, he says, de-
served well of the working class for protecting their inter-
ests ! l
Is it not really surprising that Marx is still thought of
a good deal in some quarters, and that people generally re-
fuse to accept the decision of M. Slonimski who announces
that: "No matter how much the admirers and followers of
Marx who believe in the scientific character of his method
may protest, the truth is that he merely created a Utopia
which is vulgar in its nature and is only suited to the nar-
row horizon of ordinary workingmen and to the notions of
the imagination of those who see in the amount of pay they
receive for their labor the highest blessing?"
We will also leave for future consideration the question
of the " modification " of the Marxian theories at the hands
of their authors, of which there is so much talk in the
literature of Revisionism. These supposed " modifications "
are really nothing more than an attempt to make the sup-
posed contradictions plausible, and deserve to take their
place alongside of them. We will, therefore, limit our-
selves at this place to objections springing from mere con-
fusion of terms and ideas. We want to say again, however,
that the malady is so general with Marx-critics, and its rav-
ages so extensive that it is absolutely impossible even to
recount them properly, not to say analyze them all, and we
will perforce be compelled to attend only to some shining
examples. There are some individual writers who at least
1 Ludwig Slonimski, Karl Marx' Nationaloekonomische Irrlehren. Ber-
lin, 1897-
MATERIALISTIC CONCEPTION OF HISTORY. 4F
by volume, if by nothing else, have won for themselves a
place of honor in the roster of Marx-critics, and we will
have to return to them again when occasion offers. So, for
instance* Professor Masaryk, to whom we intend to pay our
respects later on. Here we only wish to add to the con-
fusionists already mentioned, our own Professor E. R. A.
Seligman of Columbia University, President of The Amer-
ican Academy of Political and Social Science, etc., etc., who
has written what our book-reviewers call " a very read-
able " little book entitled " The Economic Interpretation of
History." It must be admitted that Professor Seligman, be-
ing an American, believes in fair play, and that he is "emi-
nently fair" and even generous to Marx. With this, how-
ever, and perhaps, because of it, he is exceedingly super-
ficial, and scandalously confused. We shall return to the
gentleman at some future time in a discussion of the ques-
tion of " monism " in history, of which he treats. We do
not consider a discussion of that question properly within
the bounds of the present discussion, for the reason that
the question of " monism " is not one which affects the Ma-
terialistic Conception of History alone. It affects the ideal-
istic conception of history just as well. In other words,
it is a question that affects philosophy in general. As such
it also affects the materialistic conception of history, but it
is not an objection exclusively directed against Marxism, —
our present topic of discussion. Of course, all these ques-
tions are inter-dependent, particularly .with the confused
mode of treatment pursued by most Marx-critics, who us-
ually serve up in their writings a Hungarian Gulash or an
American hash of objections of all sorts and kinds thrown
together. Here, therefore, is, for the present, a mere taste
of our American Marx-critic. We will serve the prepa-
ration in its original wrapper, and let the readers dissect or
analyze for themselves. He says:
" All human progress is at bottom mental progress ; all changes
must go through the human mind. There is thus an undoubted
42 THE THEORETICAL SYSTEM OF KARL MARX.
psychological basis for all human evolution. The question, how-
ever, still remains: what determines the thought of humanity?
. . . This claim (that all sociology must be based exclusively
on economics, and that all social life is nothing but a reflex of
economic life) can not be countenanced for the obvious reason
that economics deals with only one kind of social relations and
that there are as many kinds of social relations as there are
classes of social wants. We have not only economic wants, but
also moral, religious, jural, political and many other kinds of
collective wants ; we have not only collective wants, but indi-
vidual wants, like physical, technical, aesthetic, scientific, phil-
osophical wants. The term 'utility,' which has been appropri-
ated by the economist, is not by any means peculiar to him.
Objects may have not only an economic utility, but a physical,
aesthetic, scientific, technical, moral, religious, jural, political or
philosophical utility. The value which is the expression of this
utility and which forms the subject-matter of economics is only
one subdivision of a far greater class. For all the world is
continually rating objects and ideas according to their aesthetic,
scientific, technical, moral, religious, jural, political or phil-
osophical value without giving any thought to their economic
value. So far as utility and value are social in character, that
is, so far as they depend upon the relation of man to man, they
form the subject-matter of sociology. Economics deals with
only one kind of social utilities or values, and can therefore not
explain all kinds of social utilities or values. The strands of
human life are manifold and complex.
" In this aspect what is untrue of the individual can not be
true of the group of individuals. We have passed beyond the
time when it was incumbent to explain the fallacy lurking in
the phrase 'the economic man.' There is indeed an economic
life and an economic motive — the motive which leads every
human being to satisfy his wants with the least outlay of ef-
fort. But it is no longer necessary to show that the individual
is impelled by other motives than the economic one, and that
the economic motive itself is not everywhere equally strong,
or equally free from the admixture of other influences. A full
analysis of all the motives that influence men, even in their eco-
nomic life, would test the powers of the social psychologist.
There is no 'economic man,' just as there is no 'theological
MATERIALISTIC CONCEPTION OF HISTORY. 43
man.' The merchant has family ties just as the clergyman has
an appetite. . . .
" In one sense, accordingly, there are as many methods of in-
terpreting history as there are classes of human activities or
wants. There is not only an economic interpretation of history,
but an ethical, an aesthetic, a political, a jural, a linguistic, a re-
ligious and a scientific interpretation of history. Every scholar
can thus legitimately regard past events form his own peculiar
standpoint." *
Has anybody ever been across a greater mix-up of truths,
half-truths, untruths, platitudes and meaninglessness ?
Whatever may be said as to whether or not " the strands of
human life are manifold and complex," one thing is quite
certain: Human life is too short for one man to attempt to
unravel all this nonsense.
If all changes (Changes of what? Of environment or of
environment into institutions or ideas?) must go through
the human mind but do not originate there, why is all hu-
man progress at bottom mental progress? Isn't the thing
which changes, and its changes which go through the hu-
man mind, at the bottom of human progress, and the mental
progress, the result of these changes going through the
human mind, only the top of human progress ? Is not Marx
right when he insists that the changes which go through the
human mind are the basis of all social progress ?
What does the learned professor mean by " social wants "
and " collective w^ants," and are these terms interchange-
able? And why does he slide down from social or collec-
tive wants to individual wants? Does he mean to say that
the Materialistic Conception of History is incorrect because
it does not explain or "take into account" individual
wants ? What does he mean by " technical " want as an in-
dividual want? Does he mean to say that Physical and
Technical "wants" (whatever these mayv mean) are not
material wants? Are not technical relations exclusively so-
1 Edwin R. A. Seligman, The Economic Interpretation of History. The
Columbia University Press, 1903.
44 THE THEORETICAL SYSTEM OF KARL MARX.
cial and economic relations? Doesn't the learned professor
know that some Marx-critics, among them his distinguished
colleague Professor Earth, object to the Materialistic Con-
ception of History because the technical development alone
does not explain history? And who is right? Professor
Earth, according to whom the " technical development " is
all there is of Marx's explanation ; or Professor Seligman,
who objects to Marx's explanation because it does not in-
clude the "technical wants?" Will the gentleman kindly
vouchsafe an explanation of " scientific " want, " philoso-
phic " want, and " jural " want? What does he mean by
" jural " relations? Does he mean the social relations as
expressed in codes of positive law? If so, does not he know
that these laws deal almost exclusively with the property
relations of people, which are certainly material and eco-
nomic relations; and that all the few exceptions "deal" in
"morality;" and that all jural relations are, therefore, nec-
essarily contained in the economic and moral relations, in-
deed, are their expression?
What does Professor Seligman mean by suddenly, with-
out warning or explanation, substituting " economics " for
economic interpretation of history, and in talking of " eco-
nomic," "economists," "utility," "value," as if the Ma-
terialistic Conception of History were an explanation of his-
tory by means of the special science known as political econ-
omy? Does he mean to say there there is any warrant in
Marx even for a suggestion of this kind, or does he sim-
ply speculate* on the ignorance of his readers who probably
know nothing about Marx, except that he was a writer on
political economy? And is that why he first changed the
Materialistic Conception of History into an " Economic In-
terpretation of History?" Is it all intentional confusion,
or is he really so confused? And why does he tell the
Marxists " that it is no longer necessary to show that the
individual is impelled by other motives than the economic
one," have not they themselves reiterated this for the bene-
fit of their critics ad nauseam? And hasn't Marx himself
MATERIALISTIC CONCEPTION OF HISTORY. 45
put the " economic man " to rest in his grave, from which
the opponents of Marx are now trying to raise him? As
an economist he ought to know these things. But if the
demise of the " economic man," and the attempts at his re-
suscitation have not been noted in Professor Seligman's
statistical department, why didn't he inform himself of it
from his friend, Professor John B. Clark?
Again, what does he mean by a " linguistic " explanation
of history, and is that based on a " linguistic " relation
which is the result of a "linguistic" want? What does he
mean by a " religious " explanation of history, besides an
"ethical" one, (whatever that may mean) ? Does he mean
a creed or church explanation? And does he really mean
that a " scholar " can " thus legitimately " " regard past
events " from such a " standpoint ? " And does he really
think that notwithstanding all this, there is still room for a
"scientific" interpretation of history?
There are some other very interesting questions we might
ask Professor Seligman, but the strands of human life being
so manifold and complex, as Professor Seligman truly ob-
serves, and the Marx-critics being so many and so multi-
farious, we must leave him in peace, particularly as he
probably meant no harm. But before leaving him we must
ask him what has become of his quest for the cause which
" determines the thought of humanity," with which 'he
started out? Has he forgotten all about it? And yet, that
was the question under consideration!
That was the question to be considered, if he was really
anxious to find a scientific explanation of history, or, rather,
if he wanted to treat history scientifically. But that is just
what modern Marx-critics are extremely anxious to avoid.
Hence, their plea for all sorts of " standpoints," " factors,"
etc., etc., which they themselves do not define or explain,
but which serve the general purpose of making the scientific
treatment of history impossible. In this even such extremes
as Seligman and Weisengruen meet. Except that while the
superficial and democratic American is " easy " with the
46 THE THEORETICAL SYSTEM OF KARL MARX.
historians, and announces that any tommyrot, written from
any " standpoint," is as good science as anything else, the
thorough and conservative German makes the task of the
historian impossible of accomplishment by claiming that sci-
entific history must contain things which it is impossible for
it to contain, and which, if it were possible to put them there,
would make it absurd.
Weisengruen objects to the theory of the class-struggle.
But not because there is no such struggle. Oh, no ! That
there is a struggle of the classes into which society is at
present divided he can no more deny than Seligman can
deny that the economic relations of society are the principal
motive-power of History. But just as Seligman finds other
" relations " which enable him to write history from all sorts
of " standpoints," so does Weisengruen find all sorts of strug-
gles which he claims must be " taken into account " by a
scientific historian. These struggles, which, according to
Weisengruen, go to make up real history, are not merely so-
cial struggles but also struggles between individuals, and are
of every nature and description. His demands upon scien-
tific history are, therefore, so many that they cannot all even
be recounted here. Here are some of them, as a sample:
The " scientific " historian must embrace, with an " intui-
tive " gaze, the real essence of the period of which he de-
sires to treat, and must at the same time be able to correctly
measure its " psychical range." He must know every oc-
currence, even the smallest; and must be acquainted with
every document, even of the least importance. And in or-
der that the reader may not think lightly of this task,
Weisengruen takes care to warn him of the insuperable dif-
ficulties which will beset the scientific historian. And those
difficulties are indeed insuperable. For it must be remem-
bered that Weisengruen does not refer to social occurrences,
or public documents. No, he mcv.ns every individual oc-
currence of any kind or description, and every private docu-
ment of whatever import. Quarrels between husband and
wife, neighborly gossip, love-letters, everything is here io-
MATERIALISTIC CONCEPTION OF HISTORY. 47
eluded. And everything about everything. For our author
has suddenly grown very democratic, and insists that every-
body makes history. Nothing is so mean, nor is any station
in life so lowly, as not to influence the course of history.
In order that there be no mistake about it, he gives the fol-
lowing express instructions: "He (the historian} must
know all the persons (of the period he describes), their fam-
ily relations, their actual course of action, as well as the
opinions they held of each other. . . . All to the small-
est detail."
Then he must know everything about everything else in
creation: All sorts of relations between all sorts of groups
in society, covering all the social relations of the people,
the economic structure of society, the politics, ideas, sci-
ences, etc., etc., and everything to the minutest detail. The
Marxists also demand knowledge of all these social matters
but Weisengruen does not mean it that way at all. No.
He is a thoroughgoing scientist, as we have already seen,
and therefore the historian's knowledge of social matters
which he demands must be on a par with his knowledge of
individuals and their relations as already hinted at. For
instance, the historian must not only be acquainted with the
tools, manner and processes of production in use, and the
things produced during the period of which he treats, but
he must have an actual inventory of all the " goods, wares
'and merchandise," as well as of all the household furniture,
clothing and other worldly goods, possessed by each and
every person who lived during that period, with all of whom,
as we already know, the historian must be personally ac-
quainted.
If this is not materialism run mad, what is it?
Of course, Weisengruen knows the absurdity of all this.
And this would never have been said if it were not for the
terrible plight in which he found himself in attempting to
disprove the claim of the Materialistic Conception of His-
tory to the sole and exclusive possession of the attribute
48 THE THEORETICAL SYSTEM OF KARL MARX.
science, in its own proper field. Weisengruen's madness
has method. All this moonshine is put up to us in all
seriousness for one purpose only. If all this is impossible,
and there is no denying that fact, then scientific treatment
of history is impossible until some dim and distant future
of which we can take no cognizance. And meanwhile, (and
there is the rub), there is no science, and anybody and
everybody has license to write any rot he pleases from any
" standpoint " he pleases. . . .
You see, we are at the same old game again. . . .
Weisengruen and Seligman, Masaryk and Slonimski, and
the rest of the tribe, are essentially alike. Whether by way
of ponderous philosophic moonshine, or elegant phrase-
mongering, the flow of objections to the Materialistic Con-
ception of History runs from the same source, and it wends
its course towards the sam* objective point.
CHAPTER IV.
VALUE AND SURPLUS VALUE.
I.
As was already pointed out, the Marxian theoretical
system is one solid structure and cannot be properly under-
stood unless viewed as a whole from foundation-stone to
roof-coping. To criticize any of its parts as if it were a
complete structure in itself is, therefore, a mistake which
must necessarily lead to all sorts of fallacious conclusions ;
and to accept any one of its parts and reject the others, as
many of the latter-day critics do, simply betrays ignorance
of the parts which are accepted and rejected alike. The
Marxian theoretical system must be examined as a whole,
ana accepted or rejected in its entirety, at least as far as
its structural parts are concerned.
It is rather the fashion among Marx-critics to treat the
Marxian " philosophy " and " economics " as if they had ab-
solutely nothing whatever to do with each other, and to ac-
cept one and reject the other according to the critic's fancy.
As a matter of fact, however, Marx's " philosophy " is noth-
ing- more than a generalization deducted from the study of
the economic conditions of the human race during its en-
tire course of historical progress, and his " economics " is
merely an application of his general historical theory to
the particular economic structure known as the capitalist
system.
How Marx came to take up the studies wjiich resulted in
the formulation by him of the theoretical system which
bears his name, and the course which those studies took,
is very illuminating in this respect, and his own account of
49
50 THE THEORETICAL SYSTEM OF KARL MARX.
it, given in the preface to his " Critique of Political Econ-
omy," is of more than passing interest, and we shall there-
fore place it before our readers.
In 1842-43, Marx says, he found himself, as editor of the
" Rheinische Zeitung," the leading German radical paper of
the time, embarrassed when he had to take part in dis-
cussions concerning so-called material interests, such as for-
est thefts, subdivision of landed property, free trade, and
the like, as his previous studies had been only in the do-
mains of philosophy, history, and jurisprudence. At the
same time he had to express an opinion on the French
schools of socialism of those days, with which he was also
unfamiliar. He therefore took advantage of his publishers'
desire to pursue a less aggressive course than his, and re-
tired to his " study-room," there to get the needed infor-
mation.
" The first work undertaken for the solution of the ques-
tions that troubled me," he says, " was a critical revision
of Hegel's ' Philosophy of Law ; ' the introduction to that
work appeared in the ' Deutsch Franzosische Jahrbiicher,'
published in Paris in 1844. I was 4ed by my studies to the
conclusion that legal relations as well as forms of state
could neither be understood by themselves, nor explained
by the so-called general progress of the human mind, but
that they are rooted in the material conditions of life, which
are summed up by Hegel after the fashion of the English
and French of the eighteenth century under the name ' civic
society ; ' the anatomy of the civic society is to be sought
in political economy. The study of the latter which I had
taken up in Paris, I continued at Brussels whither I emi-
grated on account of an order of expulsion issued by Mr.
Guizot. The general conclusions at which I arrived and
which, once reached, continued to serve as a leading thread
in my studies, may be briefly summed up as follows:"
Here follows the famous passage, already quoted by us in
the first chapter of this book, giving the whole Marxian sys-
VALUE AND SURPLUS VALUE. 51
tern in a nut shell, and containing Marx's own formulation
of the Materialistic Conception of History.
It is amusing to see the evident surprise of some Marx-
critics at the fact that Marx, instead of writing an elaborate
treatise on the Materialistic Conception of History, rele-
gated its formulation to a short preface of a purely politico-
economic work. As a matter of fact, this is very significant,
but not surprising at all. This passage contains an epitome
of the whole Marxian system : Historical foundation, eco-
nomic structure and socialist result. The book itself was
to treat the economic structure of the capitalist system
exhaustively and in detail. The Socialistic conclusions
were not elaborated for the reason that Marx did not believe
in any Socialism that did not flow directly from an examina-
tion of the capitalist system, and therefore it had to be
merely indicated, leaving it to the reader to deduce his So-
cialism from the examination of the capitalist system con-
tained in the book itself. If that examination did not lead
to Socialism such an elaboration would be either useless or
unjustifiable or both. The historical point of view, how-
ever, from which the capitalist system was to be examined
had to be formulated, as without a clear understanding
thereof the examination of the laws governing the capitalist
system of production and distribution would remain a book
sealed with seven seals. Marx, therefore, formulated his
historical theory in the preface, and then settled down to
the examination of the economic structure of our present
society and the laws governing its particular course of evo-
lution.
The opinions of the critics about Marx as an economist
are just as many and as divergent as are their opinions of
him as a philosopher. Slonimski and other critics think
that Marx has done absolutely nothing for the science of
economics; not only are his theories false but they have not
even any* historical importance. From this view to that of
enthusiastic eulogy the opinions run all the way. He has,
of course, been denied originality. He is accused by some
52 THE THEORETICAL SYSTEM OF KARL MARX.
critics of being a blind follower of the classical English
School of political economy, and particularly of Ricardo,
and again by others that he understood neither that school
in general nor Ricardo in particular. We shall not go into
tr-"t, for the reasons given before, except to say that while
many parts of his economic theory had been worked out be-
fore him, particularly by the English Classical school, the
system as such, the combination of the parts into a syste-
matic structure, the point of view from which the structure
was built, as well as the corner-stone of the structure, the
theory -of surplus value, are all his own. We also wish to
say right here that Marx had to construct an economic the-
ory of his own for the reason that his historical point of
view placed him in opposition to the reigning classical
school which accepted our economic system as " natural,"
that is to say: independent of historical development in its
origin, and final in its application. This offended Marx's
better historical understanding, his philosophy. The class-
ical school considering the capitalist system eternal, ana-
lyzed only the relations of its parts to one another, whereas
Marx, because of his peculiar point of view, looked not only
into the workings of its parts and their relations to each
other, but also into the changes effected by the relations of
tin- different parts of the capitalist system in each of those
parts and the changes in the whole system flowing there-
from. In other words, Marx examined the dynamics of
the capitalist system as a whole, and in the light so gained
re-examined its statics, already examined by the classical
school. II is philosophy which placed him in opposition to
ilu- clai&ical Kniji-li school of political economy, also pre-
vented him from drifting into any so-called psychological
theory. The underlying principle of all of these theories,
the attempt to explain social phenomena by individual mo-
tives, is entirely repugnant to his historico-sociolog^ical point
of view, requiring as that does, that social phenomena should
be explained in such a manner as to account for their origin,
VALUE AND SURPLUS VALUE. 53
growth, and decline, something which no psychologico-in-
dividualistic motivation of social phenomena can do.
When Marx came to examine the economic structure of
our social system, his problem consisted in finding answers
to the following questions: What are the sources of our
society's wealth, that is, of the means of subsistence and
comfort of the individuals composing it? How and in what
manner is it produced : what factors, circumstances and con-
ditions are necessary for its production, preservation and
accumulation? How, in what manner, and in accordance
with what principles, is it divided among the different
groups and individuals composing our society? How does
this division affect the relations of the groups and indi-
viduals participating in it, and how do these relations, and
the social phenomena which they produce, react upon the
production and distribution of wealth in this society?
What are the resulting laws governing the direction and
manner of its general movement? What are the historical
limits of this economic organization?
A careful examination of our wealth discloses the re-
markable fact that, whereas, it consists, like all wealth, of
articles ministering to the wants of the individuals of the
society wherein it is produced, of whatever nature or char-
acter those wants may be, the amount of that wealth, from
our social point of view, does not depend on the amount or
number of those articles possessed by the individuals sep-
arately or society as a whole; that any individual member
of our society may be possessed of great wealth without
possessing any appreciable quantity of articles that would
or could minister either to his own wants or to those of any
other member of our society; that, as a rule, a man's wealth
under our social system does not consist of articles which
minister to his own wants, but to those of other people, if
at all; and, furthermore, that a man's wealth may grow or
shrink without any addition to or diminution from the arti-
cles or substances of which his wealth is composed.
This is an entirely novel phenomenon historically consid-
54 THE THEORETICAL SYSTEM OF KARL MARX.
ered and one showing our wealth to be radically different,
and possessed of attributes and qualities entirely unknown,
to wealth under former forms. Besides, these novel at-
tributes and qualities of our wealth are apparently in con-
travention of the " natural " order of things. At no time
prior to our capitalistic era was the subjective relation be-
tween a man and his wealth — that is the means of his sub-
sistence and comfort — so entirely severed as it is now. At
no time prior to this era did a man and his wealth stand in
such absolutely objective, non-sympathetic, relations as they
stand now. At no time prior to our era was a man's wealth
so thoroughly non-individual, so absolutely dependent on
social circumstances, so entirely a matter of social force, as
it is under capitalism.
What is the distinctive feature, the distinguishing mark
or characteristic of the capitalist system of production and
distribution of the means of subsistence and comfort which
wrought such changes in the attributes and qualities of
wealth and how were those changes brought about?
The distinctive feature of capitalist production, that
which gives it its character, is that under this system man
does not produce goods but commodities, that is " wares and
merchandise." In other words he does not produce things
which he wants to use himself, and because he wants to use
them to satisfy some want of his, but things which he does
not want to use himself but which can be disposed of by him
to others, caring nothing whether and in what manner the
others will use them. Instead of producing goods for his
own use, as people used to do in former days, under other
systems of production, he produces commodities for the
market. Marx, therefore, begins his great investigation of
the capitalist mode of production with the following words:
" The wealth of those societies in which the capitalist mode
of production prevails, presents itself as ' an inmicnsc ac-
cumulation of commodities,' its unit being a single com-
modity. Our investigation must therefore begin with tin-
analysis of the commodity." It is the analysis of the com-
VALUE AND SURPLUS VALUE. 55
modity that must furnish us the key to all the peculiarities of
character which we have noticed in our wealth under the
capitalist system of production, showing changes which have
placed our wealth in a purely objective relation to man and
given it purely social attributes and properties.
The distinctive property, again, of a commodity, that qual-
ity of the thing which makes an ordinary good an arti-
cle of merchandise, is its exchange-value. That is to say,
the fact that in addition to the quality which it possesses of
being useful for consumption to the one who wants to use
it that way, it has the further quality of being exchange-
able, that is it can be useful for the purpose of exchange
by one who has no use for it as an article of consumption.
The exchange-value of an article therefore, while based on
the property of the article of being ultimately useful for
consumption, is something entirely different and apart from
this use-value and independent of it in its variations. In-
deed, the two qualities might be said to be antagonistic as
they exclude each other: a thing is exchange-value only to
the person who has no use-value in it, and it loses its ex-
change-value when its use-value asserts itself. It. is its ex-
change-value that makes a thing a commodity, it remains
therefore a commodity only as long as it is intended for
exchange and loses that character when appropriated for
use in consumption. The use-value of a thing is, on the
one hand, something inherent in its nature, in the very mode
of its existence, and does not depend on the social form of
its production; it remains the same use-value no matter how
produced. On the other hand, the use-value of a thing is
a purely subjective relation between the thing and the per-
son who uses it, and therefore any difference in the use-
value of a thing when used by different persons is purely
subjective with those persons. In neither of these aspects
does it come within the sphere of political economy, whose
object is the explanation of the peculiar phenomena of
wealth under the capitalist system of production, phenomena
which, as we have seen, are purely social in their nature.
"56 THE THEORETICAL SYSTEM OF KARL MARX.
Both, the natural attributes of things and the individual
uses to which they are being put, have existed long before
the capitalist system of production without giving wealth
those properties of the capitalist-produced wealth which we
have noted above. These qualities are the qualities of the
good, and these uses are the uses to which the good is being
put. They are not the qualities nor the uses of the com-
modity. They do not, therefore, an any way affect the ex-
change-value of the thing, that attribute which makes out
of the simple good the mysterious commodity with all its
peculiar faculties and attributes. Except that the good is
the substratum, the material substance, of the commodity;
and use-value is the substratum, the material substance, of
exchange-value. Historically, therefore, the good preceded
the commodity, and use-value preceded exchange-value.
Marx says, therefore : " Whatever the social form of
wealth may be, use-values always have a substance of their
own, independent of that form. One can not tell by the
taste of wheat whether it has been raised by a Russian serf,
a French peasant, or an English capitalist. Although the
subject of social wants, and, therefore, mutually connected
in society, use-values do not bear any marks of the relations
of social production. Suppose we have a commodity whose
use-value is that of a diamond. We can not tell by look-
ing at the diamond that it is a commodity. When it serves
as a use-value, aesthetic or mechanical, on the breast of a
harlot or in the hand of a glasscutter, it is a diamond and
not a commodity. It is the necessary pre-requisite of a
commodity to be a use-value, but it is immaterial to the
value whether it is a commodity or not. Use-value in this
indifference to the nature of its economic destination, i. e.
use-value as such, lies outside the sphere of investigation of
political economy. . . . But it forms the material basis
which directly underlies a definite economic relation which
we call exchange-value."
Our wealth, then, in those respects in which it is differ-
ent from the forms of wealth which preceded it. and which
VALUE AND SURPLUS VALUE. 57
distinguish it as capitalistic wealth, is an aggregation of
exchange-values. In other words: our wealth, in so far as
it is not merely used for consumption, but retains its capital-
istic properties, is capital, is an aggregation of exchange-
values. We have already seen that exchange-value is not
something inherent in the thing itself as an element or con-
dition of its natural existence. We have also seen that it
bears no subjective relation to the person who uses it as
such, that it does not depend on anything he does or omits
to do, but is an objective attribute derived from some social
relation of the individuals within the society in which it is
produced. We must therefore conclude that capital, which
is an aggregation of exchange-values, is nothing more than
a social relation of individuals, and that its properties, which
it can only possess by virtue of its being such an aggrega-
tion of exchange-values, are merely the result of the social
relations of which it is the expression.
What are the social relations represented by exchange-
value, and its composite — capital? What are the proper-
ties of exchange-value and capital and the laws governing
their existence, and how are they derived from and gov-
erned by those social relations? The answering of these
questions is, according to Marx, the object of political econ-
omy, and to their critical examination his life-work was de-
voted.
Before entering, however, upon this examination we
must put before ourselves clearly the problem which con-
fronts us, and define clearly the questions which we are
called upon to answer. We have already pointed out some
characteristics of our wealth which make it different from
the wealth possessed under any previous social system and
which show clearly that our form of wealth is the product
of our peculiar social relations. These characteristics are,
however, not the only ones which require explanation.
Even a cursory examination of our economic system will
reveal the fact that our value-wealth is full of mysteries
58 THE THEORETICAL SYSTEM OF KARL MARX.
which, if considered by themselves, defy all attempts at ex-
planation.
The mystery surrounding the origin of our wealth was al-
ready indicated above in showing the peculiar property of
our wealth to grow and shrink irrespective of any addition
to, or diminution from, the material substances of which it
consists. This mystery deepens the further we go into the
examination of the production of wealth in our society, and
even more so when we come to consider its distribution.
Only some of the more characteristic phenomena which puz-
zle the inquirer into the nature of the wealth of capitalistic
nations need be mentioned here in order to show the nature
of our problem.
While, as we have already stated, the amount of our
wealth may grow or diminish irrespective of the growth or
diminution of the articles of which it consists, thus showing
clearly that our value-wealth is something extrinsic and
independent of the nature and uses of those articles, yet
there is something in the very independence of value-wealth
from its material substance which shows a close connection
between them. It is true that this connection is rather in the
nature of a hostility, partaking of the antagonism already
pointed out between use-value and exchange-value, but the
connection is nevertheless clearly defined and resembles in its
character the connection of polarity, to borrow an example
from another field of scientific research. It has, namely, been
observed that there is a constantly growing difference be-
tween the accumulation of use-value and exchange-value,
a constantly growing difference between the amounts of our
value-wealth and the material substances of which it con-
sists. That is to say, it has been observed that with the
increase of the production of goods commodities diminish
in value, so that the larger the increase in our " natural "
wealth, that is in useful articles which go to make up the
stores of our social or value-wealth, the smaller the increase
of the latter. In other words the growth of our value-
wealth constantly and systematically falls behind the growth
VALUE AND SURPLUS VALUE. $9
of the material substances of which it consists. This shows
clearly that while the value of a thing does not depend on
its natural qualities or the uses to which it may be put, so
that exchange-value is entirely independent of use-value,
there is a certain well-defined relation existing in their pro-
duction, at least. What is that relation?
While this question of our wealth-production is merely
mysterious, the questions of its distribution are puzzling and
perplexing in the extreme. A cursory survey of our social
system will show that there are very many persons in our
society who evidently do not produce any wealth and yet
have it in abundance. In fact, most of our wealth is found
in the possession of persons who have not produced it.
Where did they get it? The answer which suggests itself
to this query is, that they got it from the persons who did
produce it. But then the question arises: How did they
get it? They did not take it by force, nor was it given to
them for love. How did they get it?
Ever since man has kept written records of his doings
there have been social classes composed of people who have
neither toiled nor labored and still managed to live on the
fat of the land. But the actions of these people have al-
ways been plain and above board. Everybody could see just
how they managed it. There was never any mystery as to
where their fat came from, nor how they got hold of it.
The division of the wealth between those who produced it
and those who didn't was done in the light of day and by a
very simple process, so that each article produced could be
traced into the hands of its ultimate possessor and each arti-
cle possessed could be traced back to its original source. A
child could tell the sources of wealth of an ancient slave-
holder or medieval feudal baron. Not so with our non-
producing classes. The sources of the wealth of our mer-
chant-princes are shrouded in mystery. An honest mer-
chant is supposed to, and usually does, pay for his wares
what they are worth and sells them again for what they
are worth. Wherefrom, then, does he get his profit? Two
60 THE THEORETICAL SYSTEM OF KARL MARX.
men make a bargain and exchange equal values, for they are
honest and would not cheat each other, and yet both make
a profit! Where does their profit come from? Some fool-
ish people think that merchants* make their profits by buy-
ing in the cheapest market and selling in the dearest. In
other words, by cheating or taking advantage of each other.
This is evidently a mistake. A merchant may, of course,
make an extra profit by taking advantage of his neighbor.
In that event his neighbor loses as much as he has made.
But the regular profits of the merchant are realized when he
buys and sells goods at their fair prices. That is why all
hands are making money. Otherwise the capitalists would
be preying on each other and one would gain just as much
as the other would lose. Wealth would merely circulate
among the different members of the class but there would
be no net gain. What would the merchant class live on?
They could no more live on each other's losses than they
could by taking in each other's washing. But the capitalist
class docs manage to live and thrive and even accumulate
and amass large stores of wealth. Where, then, does the
capitalist class get it?
Other explanations offered are that the merchant by buy-
ing and selling enhances the value of the article sold and
that the enhanced value is the merchant's profit ; or that the
merchant's profit is a reward for services as middle-man be-
tween producer and consumer. This last proposition is be-
side the point for the reason that it is not a question of ethics
with which we are concerned, as to whether the merchant
deserves what he gets, but a pure question of mechanics:
how, and wherefrom, he gets it. Nor does the explanation
that the merchant " enhances " the value of an article, that
is creates new value, by selling it, answer the question :
\Yhere and how did he get it? How is the value of a
thing "enhanced" by a mere change of hands? Its natural
qualities remain the same. The uses to which it can be put
remain the same. Where was this value before the nier
chant got it? Who produced it, and why did its producer
VALUE AND SURPLUS VALUE. 6l
part with it? If a mere change of hands creates value, why
do some people foolishly toil in the sweat of their brows to
produce new articles in order to get values, when value can
be "got by the much easier process of sending the articles
already on hand around the circuit? This brings us back
to the question: What is exchange-value, and how is it
produced or got?
We will see later in the course of the discussion how
Marx's theory of value and surplus-value answers all these
questions and unravels all these mysteries, and that it is the
only theory that answers the problem of political economy
satisfactorily, thus making political economy a real science. -
We will also see the place of our economic system in the
string of economies which go to make up the history of the
human race until now, and what its further development
must or is likely to lead to. We will see, incidentally, how
entirely puerile is the talk of Bernstein and his followers
who, not understanding the essence of the Marxian theory
of value, and overawed therefore by the volume of criti-
cism levelled against it by the very learned economists, at-
tempt to hide behind the contention that this theory is not
an essential element of Marx's socialist system. We will
see, lastly, how utterly absurd is most of the 'criticism of
these learned critics from Boehm-Bawerk down or up.
II.
True to his method of " no philosophy," Marx set about
his task of finding the true laws of exchange-value in the
most " unphilosophic," matter-of-fact way. He argued that,
while the laws of value furnish the key to the understanding
of our economic system, those laws themselves can only be
derived from the observation of the actual^ every-day facts
of our production and distribution. In order, however, that
these facts may be properly understood and appreciated they
must be examined in their historical connection and in the*
proper historical setting.
62 THE THEORETICAL SYSTEM OF KARL MARX.
The production and distribution of the capitalist system
can be best studied by an examination of a typical capital-
istic commodity: a Factory Product. While the capitalist
system has impressed itself upon every phase of life of every
society in which it prevails, so that nothing can escape it,
whether properly belonging within its domain or not, its
characteristic features, its vital elements, are contained in
their purity, and simplicity only in its historic embodiment,
— the factory product. The factory product is not only the
historic form of capitalist production, accompanying its ap-
pearance on the historical arena as its technical embodi-
ment, but it represents the vast majority of all the com-
modities of capitalist society. The factory product bears
the imprint of capitalism so deeply emblazoned upon it, and
is so free from entangling alliances with any forms of pro-
duction other than capitalistic, that there can be absolutely
no mistaking its origin and virtues. Not so with other prod-
ucts. Take, for instance, a farm product. You can not, by
the mere fact of its production as a farm product tell whether
it was produced under the capitalistic regime or not. This
is due to the fact that our form of ownership and cultivation
of land have to a great extent remained far behind the gen-
eral progress of our economy. We cannot, therefore, by
examining a farm product tell the characteristics of capi-
talist production, for we cannot tell which of the properties
of the farm product are the result of capitalism and which
are the survival of some prior mode of production. After
we shall have learned to know the characteristics of cap-
italist production, we shall see that these characteristics
are to be found also in the capitalistically produced farm
product. The examination of the farm product may, there-
fore, serve to find the limits of the laws of capitalistic pro-
duction, but not these laws themselves. For that purpose
we must study the factory product.
It is well to remember in this connection that "historically
the capitalist system has built its foundation on the ruins of
farming, and that their progress is usually in the inverse ra-
VALUE AND SURPLUS VALUE. 63
tio to each other. It is one of the contradictions of capitalist
society, that while it needs farm products in order to sus-
tain itself, farming does not fit into its scheme. In such
typically capitalistic countries as England, for instance, this
contradiction was solved by practically eliminating farm-
ing, and drawing its food supply from abroad. But as this
is an obviously impossible solution for the whole capitalistic
world, attempts have been made to capitalize farming. So
far, this has met with only indifferent success. That is
why the " agrarian question " is now uppermost in all
economic discussions. From all this it is perfectly plain
that if we want to understand the capitalistic system we
must study the factory product.
The most characteristic feature of the factory product as
a natural phenomenon, that which marks its contrast to the
farm product, is its comparative independence of climatic
and other natural phenomena — an independence which
makes it practically reproducible at will. Unlike the farm
product, which depends for its successful production on the
varying conditions of soil and climate (conditions usually
not subject to change at the hands of man) and is therefore
limited in its production by a force to which all men must
bow, the factory product knows no other superior but man
who reproduces it at will. The limimts of the production
of the factory product are not given by nature, but im-
posed by man ; production of the factory product increases
or slackens in accordance with the demands of the
" market ; " that is to say, its limits are set by the relations
of the members of society in the distribution of the manu-
factured product among themselves. In this it typifies the
capitalist system. With the advent of the capitalist system
poverty and riches have ceased to be a natural condition;
they have become a social relation.
Let us, then, take the factory product and follow its
natural course in life; let us examine the manner of its
production, the course it takes in the circulation of goods
to the point of its ultimate destination, — consumption; let
64 THE THEORETICAL SYSTEM OF KARL MARX.
us see who are the persons participating in its production,
instrumental in its circulation and sharing in its distribution.
In thus writing the biography of any factory product we
will find that its life history will read as follows:
It was produced in a large factory building owned or
hired by the manufacturer. It was made by a large num-
ber of workingmen hired by the same manufacturer, who
paid them for their labor, out of materials provided for by
the manufacturer, and by means of machinery owned by
him. After our factory product was ready for use it was
shipped to a wholesale dealer, who bought it from the
manufacturer, and who, in turn, sold it to a retail dealer.
From the retail dealer it went to the consumer, who pur-
chased it from him. This is the usual course. There are,
however, variations of this course. The wholesale dealer
may, for instance, have been omitted, if the manufacturer
sells direct to the retailer; or, there may have been a good
deal more of buying .and selling done in it before it finally
reached the consumer. One thing is sure, however, its
life-course led through these three stages: manufacture,
trade, consumption.
The persons whom it met in this, its life-course, who af-
fected its existence and its different changes, and who par-
ticipated in its distribution in one way or another, besides
those who participated in the production and distribution
of the raw material from which it was made, which 'may
itself have been a factory product, are: The laborer who
produced it and was paid for it; the manufacturer who
caused it to be produced, paid the cost of its production and
received the purchase price from the trader who bought
it from him ; the merchant who bought it at one price and
re-sold it at another, pocketing the difference; and, finally,
the consumer, who paid for it and kept it for consumption.
either personal, non-productive, or impersonal, productive
consumption in the manufacture of some other factory prod-
uct. There may have been others: the manufacturer may
have paid rent for his premises to the landlord or interest
VALUE AND SURPLUS VALUE. 65
for his capital to the banker; the trader may have paid
rent, interest, or for help; there may have been a lot of
time and labor spent in transporting it from place to place
until it finally reached its place of ultimate destination, the
consumer — and all of this had to be paid for.
All these persons who participated in the production or
circulation of our factory product, and all those with whom
they must " divvy up/' must share in our factory product,
that is to say, in the price which the ultimate consumer
paid for it. Let us see how it is done.
We must, of course, as already pointed out above, as-
sume that each gets what is due him, under our present
system, as they are all presumed to be honest, the cases
of one getting advantage of the other are exceptional, and
they are all free agents working without compulsion. The
workingman is " free " to work or not to work, so is the
manufacturer and merchant to hire, buy and sell. The
capitalist system needs for its proper development, and we
therefore assume, absolute freedom, personal and commer-
cial. How, then, is the share of each determined, when is
it produced and when paid over?
It must always be remembered that none of those inter-
ested in the production, circulation and distribution of the
factory product, have any interest whatever in its existence,
or desire for its possession. None of them gets any share
of it physically. Their distributive share comes out of the
purchase price paid for it by its ultimate consumer, who
takes it out- of the "market," converts' it from a commodity
into an ordinary good possessing only its natural qualities
of a use-value. In other words, each of their distributive
shares comes of the exchange-value of the commodity which
is turned into the universal medium of exchange — money
— by its sale to the ultimate consumer.
This exchange-value first manifests itself wh£n the manu-
facturer has the commodity ready for sale and places it on
the market for which it was produced. The manufacture*
produced it not for its use-value, — he never had any per-
66 THE THEORETICAL SYSTEM OF KARL MARX.
sonal use for it and never intended to use it, — but for its
exchange-value, and as soon as it is ready in exchangeable
form he offers it for sale or exchange. He sells it, again,
to somebody who has absolutely no personal use for it and
does not intend to use it himself, but buys it just as the
manufacturer manufactured it, because of the exchange-
value there is in it, and which, by the way, for some reason
or other, he expects to be more than what he pays for it.
On this first manifestation of the exchange-value of the
factory-produced commodity the manufacturer gets in ex-
change for it a certain sum of money or other commodities,
the price obtained on its sale or exchange. The exchange
value of the commodity has realized itself in his hands in
the form of its price.
We must not, however, confound price with value. Value
is something which the commodity possesses when placed
upon the market and before any price is paid for it, and it
is because of this value that the price is paid for it. The
value is the cause of the price. Furthermore, value and
price do not always coincide in amount. The price of an
article may be greater or less than its value, according to
circumstances. The proof of this is the fact that things
may be bought " cheap " or " dear," that is to say, for a
price above or below their value. If the price of a thing
and its value were the same, nothing could be bought either
cheap or dear, because the price paid would be its value.
The fact that we speak of things as being bought or sold
"cheap" or " dear "" proves that our valuation of the thing
is something outside of the price, and therefore something
with which the price may be compared and proved cither
too high or too low. It is, therefore, manifest that value
and price are not only not identical in their nature, but that
they do not always even coincide in amount. And this,
notwithstanding the fact that value is the cause of price.
The reason for it is easily discovered. Value is a social
relation and is therefore determined by social conditions,
whereas price is an individual valuation and is therefore
VALUE AND SURPLUS VALUE. 67
determined by individual motivation. Value being the cause
of price, the chief motive of the individual making the
price, will, of course, be the value of the thing priced. This
does not mean, however, the actual value of the thing, but
his opinion of its value. Whether this opinion will be a
correct estimate of the actual value of the thing depends,
of course, on a number of individual circumstances and
conditions. Besides this chief motive, again, there may be
a number of subsidiary motives, all being either directly
individual in their character, or individual estimates of
social conditions or relations. All this produces what is
called the "haggling of the market." As a result of this
haggling comes the price actually paid for the article, and
the average of the prices paid makes the market price.
This price is purely accidental within certain limits, be-
ing the result of individual volitions based on individual
estimation. It is so within certain limits only, for it is
controlled by its primary cause — value — which sets the
standard by which it is measured and to which it naturally
tends to conform, and will conform the more the nearer to
the truth are the individual estimates of the social relations
and conditions, and the freer the individual motivations are
from purely personal considerations. Value is the norm
about which the " haggling " of the market takes place, and
the price which results from this " haggling " naturally
gravitates towards its norm-value. Price will be " cheap "
or "dear" according to whether it is, in the estimation of
the person making the valuation, below or above the actual
value of the thing.
What is this social element, this social relation, which
gives a commodity its value? A careful search will reveal
only one element common to all commodities, which is
social in its character and is capable of giving commodities
the value which will express the social relations of pro-
duction, and that is — Human Labor. The production of
the typically capitalist commodity, the factory product, is
wholly a question of the application of human labor, physical
68 THE THEORETICAL SYSTEM OF KARL MARX.
or mental, and its results merely a question of the quantity
and quality of the human labor expended. It "is this labor
which gives the product its value. It is by the expenditure
of this labor that its value is measured. It is as the em-
bodiment of a certain quantity-quality of human labor
that the finished product is placed upon the market for sale,
and it is as such that it is exchanged for another com-
modity, or the universal commodity — money. In making a
sale or exchange the parties knowingly or unknowingly es-
timate the respective quantities of labor contained in the
articles exchanged or in the articles sold and the price given,
and if one finds them to be equal or to preponderate in his
own favor he makes the bargain. The question of quality
is also regarded as a question of quantity, labor of a higher
nature being reduced to its simple form of ordinary aver-
age labor of which it represents a larger quantity.
It must be borne in mind, however, that, value being a
social phenomenon based on social conditions and relations,
it is not the labor which happens to be accidentally con-
tained in any given commodity, as the result of some in-
dividual conditions or circumstances under which its pro-
ducer worked, that gives the commodity its value, but the
socially necessary labor therein contained. In other words,
the value of a commodity is not derived from the particular
labor actually put into its production, nor from the amount
of labor actually expended upon its production, but from
the amount of average human labor which it is necessary
tor society to expend for its production. The mere ex-
liture of labor on the production of any article does
not make that article a commodity having exchange value.
-ocial e.\|tenditure of the labor, that is, its expenditure
for ihe purposes of social production, of the production for
• -ty of things which are useful for it, that makes the
article produced a commodity having exchange-value. The
nditure, therefore, in order to create value must be
necessary in accordance with the social relations and con-
ditions existing at the time the valuation is made. This in-
VALUE AND SURPLUS VALUE. 69
eludes a variety of considerations, only the most important
of which can be noted here.
To begin with, " socially necessary " labor must not be
confused with " average " labor. The average labor only
comes into play when the productive power of individual
producers working with the same tools is under consider-
ation. Otherwise, " socially necessary " and " average "
may, and very often do, represent different things. For in-
stance, the labor expended on the production of an article,
in order to create new value, must, in addition to having
been productive according to the average expenditure for
the production of such articles, have created something
which was necessary for society. In determining whether
an article is " necessary " for society or not, it is not merely
the general usefulness of the article and its actual neces-
sity for some of the members of society that is to be con-
sidered, but also whether, in the state of the society's
economy, the need for such articles has not already been
provided for sufficiently when compared with other needs,
and having due regard to the general conditions of pro-
duction and distribution in society. If too much of a cer-
tain commodity is produced, too much not absolutely, but
according to existing social conditions and relations, such
production does not create any additional value. It is so
much labor wasted. Of course, that does not mean that
any particular labor thus expended will create no value, or*
that any particular article thus produced will have no value.
But, value being a social relation, all the labor expended
in the production of this class of articles in society will
produce less value proportionately, each article will have
so much less value, so that the aggregate of such articles
produced will have no more value than if that labor were
not expended and the additional article were not pro-
duced.
Again, — the tools of production in a certain industry may
be undergoing a change by which the amount of labor
necessary to be expended in the production of a certain
70 THE THEORETICAL SYSTEM OF KARL MARX.
article is reduced. During the period of transition the
" average " amount of labor expended in the production of
the article will be considerably above the amount necessary
for its production by means of the new tools and consider-
ably below that of the old, for the average is made up of
the articles produced by means of both the old and the new
tools in so far as they are being used. The value of the
commodities produced, however, will not be measured by
the average expenditure of labor, but either by that of the
old or that of the new method. If the new method has
not yet been sufficiently perfected, so that it can not as yet
supply the needs of society, or is the subject of a monopoly,
then the valuation will be in accordance with the old
method ; if it has been so perfected, and is free for use, then
in accordance with the new method. If, between the time
of the production of an article and its valuation in the
market, the new tools have attained the required degree of
efficiency, or the monopoly has been broken, the value of
this article, whether produced by the old or the new
method, will change from the valuation in accordance with
the old method, which was socially necessary at the time
of production, to that in accordance with the new method,
which is that now socially necessary.
In other words, the value of a commodity is determined
by the amount of labor which society will necessarily have
to expend for its production when it requires it; that is
to say, by the amount of labor socially necessary for its
reproduction.
III.
We have seen before that the value of a commodity
is determined by the amount of labor which society will
necessarily have to expend for its reproduction. This ap-
plies to all commodities, including that peculiar commodity
upon which the whole capitalist system rests — labor power.
All the mystery surrounding the production and distribu-
tion of the capitalist system, which we have noted above,
VALUE AND SURPLUS VALUE. Jl
is due to the presence of this peculiar commodity which was
absolutely unknown to any former system of society. In no
social system before the advent of capitalism was human
labor power an independent commodity which could be
trafficked in in the market. A man's labor-power was
deemed such an intimately personal attribute that it could
not be considered apart from the man himself. The man
himself might be free or unfree. If he was free his labor
power was his own, used by himself for himself. If he
was unfree, he, including his labor-power and his other
personal attributes, belonged to his master. But in either
case his labor power was inseparable from his body, was
part and parcel of his personality as much as his personal
appearance, and went with it.
It was only with the advent of capitalism that a man's
labor power became separated from his body and person,
when his labor power was " abstracted " from his person-
ality and gained an independent existence. Then human
labor power " as such," human labor power in the abstract,
human labor power unidentified by an individual character-
istic and severed from any personal relation, became an in-
dependent commodity to be trafficked in in the open market.
It is the appearance of this commodity historically that made
capitalism possible, and it is due to its peculiar nature that
so much mystery surrounds the workings of that system,
upon which it has indelibly stamped its own characteristics.
The new commodity of abstract human labor, bought and
sold in the open market, independent and irrespective of any
individual or personal relation, is, at the same time, part
and parcel of the commodities which constitute the stock-
on-hand of the capitalist world as well as the source of all
the other commodities on hand. It is also its own source
and creator, being the means of its own reproduction. As
tfye general source and creator of capitalistic v commodities,
this abstract human labor is the source, and therefore, the
measure of the exchange value of those commodities. As
its own source and reproducer it is its own source and
72 THE THEORETICAL SYSTEM OF KARL MARX.
measure of value. That is to say, the measure of the value
of the capitalist commodity " general human labor power "
is the amount of this labor power necessary for its repro-
duction under the social conditions of production existing
at the time when it is dealt in on the market. This dual
position of the commodity general human labor power is
what has mystified and baffled the investigators into the
laws of production and distribution of wealth in capitalist
society. When this dual position is properly understood
the mystery vanishes, and the anatomy and physiology, as
well as the psychology of capitalist society are revealed to
the mind's eye, so that their construction and modus operandi
can be studied in detail.
We have seen already that the value of a commodity is de-
termined by the amount of labor which will necessarily
have to be expended in its reproduction. This amount of
labor will have to be bought in the open market by the pro-
ducer in the shape of labor power, potential labor, and he
will have to pay for it, barring accidents, its value. That
is to say, he will have to pay the value of the labor neces-
sary to produce this labor power, or, in other words, he will
have to pay, in the form of wages, the amount of goods
which the laborer consumes while exerting his labor power.
This amount will vary, of course, with the productivity of
labor in general, and with the standard of living of the
workingmen. But it will invariably be less than the amount
of goods produced by the laborer in this exertion of his
labor power. This is a prerequisite not only of capitalist
production, but of any social form of production wherein a
part only of the members of society are actively engaged
in the work of production. In other words, in our cap-
italist system, when a man sells his labor power to another
man for a certain number of hours every day in considera-
tion of a certain wage, the amount of labor necessary in
order to produce the product represented by his wage is al-
ways smaller than the total amount of labor which he sold
to his employer. As general human labor can only be
VALUE AND SURPLUS VALUE. 73
measured by the time during which the labor power was ex-
erted, it is the same thing as saying that the time required
to produce a man's wages is always shorter than the time
for which he was hired by the payment of these wages.
The amount of labor spent in reproducing the product
which goes to the laborer as his wages may be called
" necessary labor," for the reason that it is absolutely neces-
sary in order to make further production or even existence
itself on the same plane possible. The amount of labor, on
the other hand, which the laborer puts in above the " neces-
sary labor " we may call " surplus labor," for the reason
that it is an overplus or addition to the amount of " neces-
sary labor " which the laborer has already put in. The
product which is produced in the " necessary labor " time,
may for the same reasons be called " necessary " product,
and its value — " necessary " value ; and the product pro-
duced in the " surplus labor " time, and its value — " sur-
plus " product and value. In using the words " necessary "
and " surplus " in characterizing the different parts of labor,
product, or value, we do not intend to convey any meaning
of praise or justification in the case of the one, nor of con-
demnation or derogation in the case of the other. We use
them in their purely technical sense, with absolutely no
" ethical ' or " appreciative " significance.
This surplus value being constantly produced by the com-
modity labor power which the capitalists engaged in produc-
tion constantly employ in their business, is the secret and
mysterious source of all the wealth and revenue which fall
to the share of those classes of capitalist society, which,
without producing themselves, and without either by force
or cunning appropriating to themselves what others pro-
duced, are still found in possession of quite a considerable
share of the worldly goods of our society. Because of the
peculiar faculty of the commodity labor^ power to produce
a surplus-product representing surplus-value, the capitalist
class is enabled to obtain a part of the annual product of
society without taking it from the producers.
74 THE THEORETICAL SYSTEM OF KARL MARX.
When, at the end of a day, week, month, or year, the
manufacturer is in possession of the finished product, that
product contains the " necessary " as well as the " surplus "
value. In the " necessary " value is included not only the
wages paid to the workingmen but also the " capital " that
went into the product, or rather, that part of capital which
Marx calls " constant," that is to say, raw material, ma-
chinery charges, etc. Of course, all these things at one
time, when they were produced, represented "necessary"
as well as " surplus " value ; when they are used, however,
in production, that part of the product which simply re-
produces their value is " necessary " for the same reason
that the part representing the wages is " necessary." The
" surplus " which he finds himself thus possessed of is there-
fore a clear surplus over and above all his expenditures and
investment. It is pure revenue or profit. The amount of
the surplus-value produced, and therefore of the revenue or
profit derived by the manufacturer, depends, aside from the
mere length of the working day, as already stated, on the
state of the productivity of labor in general and the mode
of living of the workingmen; that is to say, on the pro-
portion of the " necessary " to the " surplus " in the labor
performed by the laborer during the period of his employ-
ment. The length of the work day given, the productivity
of labor and the mode of living of the workingmen affect
this proportion in opposite directions: a higher mode of liv-
ing increases the " necessary " part of the labor, and higher
productivity its " surplus " part.
After the surplus value is produced by the laborer in the
surplus time that he works, the fund from which the cap-
italist class as a class derives its revenue and " saves " its
wealth is ready for its use, and it becomes merely a ques-
tion of its distribution among the different members of the
class. This distribution is no simple matter, as it is done
for the most part without the participants meeting each
other, often without their knowledge, and always without
their consent. This distribution is accomplished by the laws
VALUE AND SURPLUS VALUE. 75
governing capitalist production, and automatically. In so
far, of course, as such distribution is according to rule,
normal. There is always, however, the possibility of one
capitalist getting the better of the other, and the individual
capitalist invariably attempts to do so. Whether or not
these attempts are successful makes, however, no difference
in this connection, as was already shown at length above.
It is the rule of capitalist society that we are concerned
with. The problem that confronts us, therefore, is: how
does part of the surplus value which, after its production
by the workingmen, is in the possession of the manufacturer,
find its way into the hands of the other members of the
capitalist class?
As was already indicated above, all value, and therefore
also surplus value, is not realized until the product which
is the embodiment of the value reaches its ultimate destina-
tion, the consumer, who takes it out of the market, disre-
gards its exchange-value and enjoys its use-value. Before
it has reached this, its ultimate destination, a commodity,
while possessing exchange value possesses it only poten-
tially. Exchange value, not being something intrinsically
inherent in the commodity, but expressing merely a social
relation of production and distribution, may at any time
before its final realization, when it ceases to be exchange
value, be adversely affected by some social change. We
have already seen that the exchange value of a thing is the
amount of labor necessary for the reproduction, at the time
when it is needed, that is to say, when it reaches the con-
sumer. Before it has reached the consumer its exchange
value is always liable to change. There is therefore really
no telling what the surplus value contained in a commodity
is until it has reached the consumer. It cannot reach the
consumer, however, before it has gone through the process
of circulation in which it is being bought and sold, that
is, exchanged. In all these transactions its exchange value,
as the same expresses itself in the price which it fetches,
76 THE THEORETICAL SYSTEM OF KARL MARX.
is estimated upon the basis of its exchange value when it
finally reaches its economic goal.
In this process of circulation the surplus value contained
in the product, as far as the persons interested in its
division are concerned, is realized by piecemeal. Each
party concerned in the production and circulation of the
commodity until it fulfills its social mission gets his share
of the surplus value therein contained when it leaves his
hands, on a sale by him, and the purchase price which he
receives represents the " necessary " part of the value of
the commodity together with the share of the surplus value
thereof to which he and those who preceded him in the
process are entitled. In this way the surplus product con-
tained in a commodity when it is produced is gradually con-
verted into surplus value as it " circulates " along, and the
surplus value is taken up gradually as it is being realized,
share by share, along its course. The division of the sur-
plus value takes place in the circulation process, and ex-
presses itself in the different prices at which the commodity
is sold at the different stages of this process.
These different prices at which a commodity is sold at
different stages of the circulation process seemed to us in-
explicable before, and vexed us not a little. But they will
be readily understood when we know that the sharing up
of the surplus value takes place in this process. As each
stage of the process is passed a share of the surplus value
is realized and is added to the price. When the exchange
value of a commodity is first realized, when the manu-
facturer sells it, it is only that part of its exchange value
that is realized and is expressed in the price which the
manufacturer obtains for it, which represents the " neces-
sary " value of the commodity and that part of its surplus
value which the manufacturer receives as "his profit. The
merchant pays his price to the manufacturer and enters into
the transaction because the full surplus value contained in
the commodity has not yet been realized and he expects to
realize a further share thereof for his own benefit upon a
VALUE AND SURPLUS VALUE. 77
re-sale of the commodity to the retailer or consumer. This
does actually happen in the usual course of business. This
operation is repeated until the commodity passes the neces-
sary stages of its circulation and reaches its social desti-
nation— the consumer — when the full surplus value con-
tained in the commodity is realized in the purchase price
paid by the consumer. This price represents the full value
of the commodity, " necessary " as well as " surplus."
The rules in accordance with which the different " in-
terests " share in the surplus-value, and in accordance with
which the different prices are paid for the commodity at the
successive stages of the circulation process are themselves
the result of the peculiar commodity of the capitalist system,
stamped upon it by the peculiar commodity which lies at its
foundation — labor power. The profit-sharing of the cap-
italist class is therefore absolutely impersonal. It also re-
quires absolute freedom of movement for the different ele-
ments which go into the process of production and
distribution. Wherever there is no absolute freedom of
movement the laws governing the division of the surplus-
value among the different capitalists are interfered with
arbitrarily and may even be abrogated. This is a necessary
corollary to the observation already made that all the laws
of value and consequently the production and realization of
the surplus-value require absolute freedom of movement.
The presence in the market of the laborer offering for sale
his laborxpower presupposes the presence in the same market
of the capitalist seeking employment for his capital. Labor
power as a commodity presupposes that the laborer who has
this power for sale is not in possession of the tools of pro-
duction necessary in order to exercise this power in the
process of production. It presupposes a high state of
technical development of production; such a state of de-
velopment that the productivity of labor is considerably
above that stage where it can merely reproduce itself; it
must yield a surplus-value, and a portion of the surplus
value must have been " saved " for the purpose of being
78 THE THEORETICAL SYSTEM OF KARL MARX.
used as a means of future production. It also presupposes
that the " saved " portions of the surplus-value produced in
the past are not in the hands of the laborers who offer for
sale their labor-power. The possessors of these " saved "
portions of past surplus-values, the capitalists, use these
" savings," capital, in the production of further surplus-
value, by the aid of the labor power which they purchase
for part of it, in order to take it all to themselves. It is
not, however, the capitalist personally who acquires the sur-
plus-value. Capital, congealed and concentrated surplus-
profit, produced by labor power, is just as impersonal, just
as abstract, as its parent, labor power. It is capital as such,
irrespective of the capitalist who owns it, that gobbles up
all the surplus-value. The capitalist personally may some-
times by his ingenuity cause his capital to produce some
extra surplus-value which other, less ingenious, capitalists
could not do. In that event it goes to him personally as an
extra profit. The ordinary, regular profits, however, of
capitalist production and trade go to the credit of the capital
employed, not the capitalist personally.
In order to produce a certain commodity and realize ita
value, that is bring it to the ultimate consumer and obtain
from him its price, a certain amount of capital must neces-
sarily be employed for a certain length of time. The
amount of capital necessary to be employed therein at the
different stages of the processes of production and circula-
tion, and the length of time for which it will have to be
employed at each stage will vary, of course, with the state
of development of the means of production and exchange,
including the means of transportation and communication
and other facilities for the circulation of commodities. Hut
under given conditions of production and circulation the
amounts of, and lengths of time for which, capital is neces-
sarily employed in order to produce a commodity and bring
it to the consumer remain the same.
We have already seen before that while all the surplus-
value contained in a commodity is produced in the process
VALUE AND SURPLUS VALUE. 79
of the commodity's production while it is in the possession
of the manufacturer, this surplus-value is divided among
all the capitalists who are concerned in the production and
circulation of the commodity, while the same remains in
the circulation process. Strictly speaking, however, as has
been already observed, the surplus-value is not divided
among the different capitalists concerned in the production
and circulation of the commodity, but among the different
capitals' employed in these two processes through which the
life-course of each commodity runs. The distributive share
of each of these capitals in the surplus-value is propor-
tionate to its own size and the length of time it was neces-
sarily employed in either the production or the circulation
of the commodity. That is to say, the total amount of cap-
ital, measured by a given unit, say a dollar, employed dur-
ing all the time, measured by a given unit, say a day, that
the commodity was necessarily in the process of production
and circulation, is footed up, and the amount of surplus-
value contained in the commodity is divided by that total,
giving a certain amount of surplus-value per unit of capital
per unit of time, which we will call the rate of profit. The
distributive share of each capital is, then, the product of its
own size X the time it was employed X the rate of profit.
When the manufacturer sells the commodity, at its first
appearance as a commodity and the first realization of its
value, the price which he receives and in which the value
is realized, is not its final price expressing its actual value
when it is ready to perform its full social function in the
hands of the consumer. It is merely an intermediate price;
Marx calls it " Price of Production." This intermediary
price is based on the ultimate price of the commodity to be
received from the consumer in accordance with its value.
It is by this expected ultimate price representing its full
value that the amount of surplus-value xrontained in it is
ascertained. When the surplus-value of the commodity is
given, the Price of Production is determined by the " neces-
sary " value contained in it plus the distributive share of
8O THE THEORETICAL SYSTEM OF KARL MARX.
the manufacturer's capital in the surplus-value. The
" necessary " value contained in the commodity represents
the cost of its production to the manufacturer. That does
not mean, however, that the manufacturer simply gets a
return of what he has expended in the production of the
commodity. It is not the actual expense of production that
is represented in its " necessary " value, but the socially
necessary expense of producing the commodity at the time
the manufacturer sells it. If the actual cost of production
is above that the manufacturer loses the difference; if it is
below he pockets the difference as an extra profit.
The prices paid at any succeeding stage of the circulating
process are fixed in the same way. Each succeeding seller
gets in the price which he receives the necessary value of
the commodity plus the distributive share of the surplus-
value to which he and his predecessors in the process are
entitled in accordance with the rules formulated above.
Each of them gets his own distributive share of the sur-
plus-value in addition to what he has paid or laid out. Pro-
vided, of course, he bought and sold at its fair price. Other-
wise, one of them may get more than his due share and
another less. But all of the capitalists concerned, together,
get all the surplus-value produced in the process of pro-
duction, and no more. Unless, indeed, the workingmen did
not get their fair pay or the consumer was compelled to pay
an unfair price, in which event the capitalists immediately
concerned reaped an extra profit. Or the workingmen were
paid too much or the consumer paid too little, in which
event the capitalists immediately concerned suffered a loss.
It was assumed all through this discussion that each
capitalist worked with his own capital. If any one of them
did not, he had to give up all or part of his share of the
surplus-value, which he received in the form of profit, to
the person from whom he borrowed his capital, in the shapr
of interest. This does not change the matter, however, and
we are not concerned with it here. We also left out of the
discussion the question of rent, and the question of ad-
VALUE AND SURPLUS VALUE. 8 1
ditional work which may have to be performed on the com-
modity in the circulation process, as these questions in no
wise affect the subject-matter of our investigation — the
laws governing the production of wealth in the capitalist
system and the manner of its distribution among the dif-
ferent classes of capitalist society.
CHAPTER V.
THE LABOR THEORY OF VALUE AND ITS CRITICS.
I.
In our introductory chapter, in speaking of the criticism
and the critics of the Materialistic Conception of History,
we have observed that the discussion of the subject was very
much obscured by certain prejudices existing against that
theory, which prevent any unbiased examination of the sub-
ject on its merits. This must be repeated and even empha-
sized with reference to the criticism of Marx's theory of
value and surplus-value. It is safe to say that at least
one-half of the adverse criticism of this theory contained in
the literature of the subject is due to prejudice which ob-
scures the vision of the critics and puts their thinking ap-
paratus out of joint This prejudice is not confined to any
particular category of critics. It affects the dignified scholar
and the fighting publicist alike. The great Bohm-Bawerck,
head and front of the " scientific " Austrian school of po-
litical economy, and the prating " popular " Professor
Masaryk are both fair specimens of it. In his great work
on capital and interest,1 where more than one hundred
pages are devoted to the criticism of this theory, Bohm-
Bawerk starts out his examination of the theory by char-
acterizing it as the " theory of exploitation," and the whole
trend of his argument is directed towards one objective
point : — to prove that the supposedly main thesis of this
theory, that the income of the capitalists is the result of
exploitation, is untrue; that in reality the workingman is
1 Eugen von Bohm-Bawerk, Capital und Capitalzins. Innsbruck, 1900.
Karl Marx and the close of his system. T. Fisher Unwin.
82
THE LABOR THEORY OF VALUE AND ITS CRITICS. 83
getting all that is due to him under the present system.
And the whole of his argument is colored by his conception
of the discussion as a controversy relative to the ethical
merits or demerits of the capitalist system. The same is
true of Masaryk. In his bulky book on Marxism his ex-
amination of the problem of value and surplus-value starts
out with the following introductory remarks :
" Sociologically the conception of surplus-value stands
foremost. Surplus-value is the economic expression of the
social conception of the classes and their mutual relations,
— of their struggle. The expression Surplus-valuers in-
tended to characterize and condemn the whole capitalistic
order and civilization. It is obvious: Das Kapital is not a
positive theory of economy, but, as is indicated by the sub-
title, a critique of the science of economics to the present
time. Das Kapital presents the theory of capitalistic ex-
ploitation. It is a text-book of capitalistic extortion, and
at the same time its vehement denunciation. Das Kapital
is therefore at the same time the theory of the Socialist
revolution, — yes, it is the revolution itself.
" As already stated, we will concentrate our criticism on
the conception of value and surplus-value. We will in-
vestigate whether or not labor, the labor of the proletarians,
is the only source of economic value and surplus-value.
Such an investigation squarely presents the question whether
or not the social order of civilization really means the ex-
ploitation of the proletariat by the capitalist class — the
criticism of Capital will resolve itself into a further in-
vestigation of the doctrine of the Class Struggle."
We therefore advisedly stated in the last chapter that in
employing the adjectives " necessary " and " surplus " in
connection with labor or value, it is not intended to convey
any meaning of praise or justification in the case of the
one, nor of condemnation or derogation in the case of the
other. As a matter of fact, Marx repeatedly stated that the
capitalist was paying to the workingman all that was due
him when he paid him the fair market value of his labor
84 THE THEORETICAL SYSTEM OF KARL MARX.
power. In describing the process of capitalist production
Marx used the words, " necessary " and " surplus " in char-
acterizing the amounts of labor which are necessarily em-
ployed in reproducing what society already possesses and
that employed in producing new commodities or values. He
intended to merely state the facts as he saw them, and not.
to hold a brief for anybody. If his theory of value and
surplus value and his condemnation of the capitalist system
stood in any causal relation (and the determination of this
question we will leave for the future), his theory of value
and surplus value was probably the cause, and his con-
demnation of the capitalist system the effect, rather than
the reverse. The statements of many of his critics, that
Marx was influenced in his examination of the question of
value and surplus value by a pre-determined thesis in favor
of which he intended to hold a brief, is absolutely false,
and the writings of these very critics contain abundant
proof of our assertion. At some future time we will dis-
cuss the so-called ethical theory of the Socialist move-
ment which is so much in vogue among many of the latter-
day Marx critics, and it will then appear beyond the possi-
bility of a doubt that it was only his intense craving for
the absolute and unalloyed truth that guided Marx in his
examination of the subject which led him to the formulation
of his theory of value and surplus value.
We saw in preceding chapters what the problem which
confronted Marx at the outset of his examination, and
which required solution at his hands was, — Is his solution
of that problem as contained in his theory of value and sur-
plus value a true one? That is, or at least should be, the
only question before us. Is Marx's theory of value and
surplus value, viewed without any bias or prejudice, cor-
rect? It is very much to be regretted that we cannot, tW
the lack of space, preface our examination of the Marxist
theory of value and surplus value with an examination
of the other theories of this subject. Such an examination
and a juxtaposition of the different theories would be an
THE LABOR THEORY OF VALUE AND ITS CRITICS. 85
invaluable aid in arriving at a true answer to the question
before us, and it is the hope of the present writer that
he will at some future day be able to do this work, so that
the relative position of the Marxian theory may be fully ap-
preciated. In this present discussion, however, we will have
to be guided by, so to speak, absolute standards rather than
relative ones, and other theories of value will only be gone
into in so far as is absolutely necessary to the discussion of
the main criticism levelled against the Marxian theory.
This particularly applies to the so-called " modern " theory
of value familiarly known as the Austrian, although by
origin and popularity England has as much claim upon it
as Austria. This " honorable mention " of the Austrian
theory of value is due not so much to its own originality
or importance, as to the fact that it seems to be the pre-
vailing one among the latter-day Marx critics, Bohm-
Bawerk himself taking the lead in the particular field of
inquiry now under discussion.
While, as we have already stated in the introductory
chapter, each tub of anti-Marxian criticism lays claim to
and is entitled to stand upon its own bottom, in the discus-
sion of the Marxian theory of value and surplus value, we
will, to a great extent, have to limit ourselves to the argu-
ments advanced by Bohm-Bawerk. The reason for it is
two-fold : first, because Bohm-Bawerk is so far superior
to his comrades in arms, and his authority on the subject
is acknowledged by them to such an extent, that it can
hardly be claimed to be unfair to these critics, to pick
Bohm-Bawerk as an example of them all. Second, because
there seems to be quite a good deal of unanimity among
these critics on this particular point, and the arguments
advanced by the others are either directly borrowed from
Bohm-Bawerk, very often, with an acknowledgment of re-
ceipt, or are variations on the same tune deserving no par-
ticular attention. Where the variation is sufficiently dis-
tinct to make a difference, it will be duly noted, as will,
86 THE THEORETICAL SYSTEM OF KARL MARX.
certainly, all those arguments which have any claim to an
independent source.
Bohm-Bawerk starts out by stating that all the prede-
cessors of Marx who have adhered either in whole or in
part to the labor theory of value, including such great lights
of the science as Adam Smith, David Ricardo, and Karl
Rodbertus, have really " assumed " the labor theory of value
without even as much as attempting to prove it. It was
pure assertion on their part, without the semblance of an
argument to support it. Karl Marx was the first who not
merely asserted the labor theory of value but also attempted
to prove it. In this Bohm-Bawerk recognizes Marx's su-
periority to the great luminaries of the science of political
economy who have preceded him. But he does not like the
way Marx did it, and is not convinced by the proof offered
by Marx in support of his theory. Bohm-Bawerk, like
the good professor that he is, instructs us as to how Marx
should have gone about the job of proving his theory of
value and puts his emphatic disapproval on the way Marx
is supposed to have actually gone about it. He says that
there were two ways open to Marx: first, to analyze the
" pyschological motives " to which the process of exchange
is due ; or, second, to examine the actual " experiences " of
the relations of exchange. Instead of adopting either of
these two courses, he says, Marx adopted a third rather
peculiar one for the subject of this inquiry, namely, that of
purely logical deduction and dialectic argumentation.
That Marx did not go about the task of discovering the
true laws of exchange-value by way of an analysis of the
" psychological motives " of exchange is perfectly true.
And we have already seen in the preceding chapter the
reason for it. The problem by its very nature showed that
its solution lay in some social phenomenon and not in any
attribute of the individuals entering into the relation of ex-
change. The " psychological motives," therefore, of ex-
change, could not possibly have anything to do with the
problems that confronted Marx. Aside from that, it was
THE LABOR THEORY OF VALUE AND ITS CRITICS. 87
very evident that "psychological," as well as other "nat-
ural " motives or causes which remain unchanged through-
out the history of mankind, could not be the cause, nor
offer any explanation, of the phenomena of capitalist pro-
duction and distribution which are not common to all hu-
man society, but are strictly limited in time as well as in
place to only a small portion thereof. It is the same thing
that we have already observed in discussing the Materialistic
Conception of History: — a constant factor cannot possibly
be the cause of a change in the result of an operation.
It is not true, however, that Marx did not adopt the
course of examining the actual experiences of exchange
relation. Nor 'is it true that the course he did adopt was
that of purely logical deduction. Marx did make a thorough
examination of the actual happenings and " experiences "
of the exchange relation as Bohm-Bawerk would have him
do, although this job did not prove so very " simple " as
Bohm-Bawerk imagined it would. In order, however,
that he might learn something that was worth while from
the actual " experiences " of the exchange relation, he had
to put these " relations " to a very careful analysis. In
doing that he was certainly guilty of using some very
sharp and pure logical reasoning. In this he could not help
himself, as he was "naturally" so constituted that to what-
ever task he applied himself he could not help but use his
logic. And that was of the very purest sort. There were,
however, no purely logical constructions or abstractions
used by him in order to prove his theory of value or sur-
plus value. Those abstractions which he did make, and
they will be duly noted, one by one, in the course of the dis-
cussion, were not only justified, but required and demanded
by the subject matter itself. But he did not start out
with any purely logical notions or abstractions, nor did he
proceed to any purely logical constructions. On the con-
trary, he kept to his base all the time, and that was the
solid ground of the facts of capitalistic production and ex-
change. It is very significant that in the whole volume of
88 THE THEORETICAL SYSTEM OF KARL MARX.
Marx's economic writings there is no mention of the
" economic man " or of his supposed attributes, " psycholog-
ical " or otherwise. Nor is any kind of an abstract man
part of his discussion. Throughout his entire work he
keeps strictly to his problem, and that is the doings of the
real, live man in the real historic situation known as the
capitalist system. In this connection it is more than a mere
curiosity to compare the opening passage of Capital with
the opening passages in the works of some of his illustrious
predecessors and contemporaries.
Adam Smith's Wealth of Nations opens with the follow-
ing passage : " The annual labor of every nation is the
fund which originally supplies it with all the necessaries
and conveniences of life which it annually consumes, and
which consist always either in the immediate produce of
that labor, or in what is purchased with that produce from
other nations."
The opening passage of Ricardo's " Principles " reads as
follows : " The produce of the earth, — all that is derived
from its surface by the united application of labor, ma-
chinery and capital, is divided among three classes of the
community, namely, the proprietor of the land, the owner
of the stock or capital necessary for its cultivation, and
the laborers by whose industry it is cultivated. Hut in
different stages of society, the proportions of the whole
produce of the earth which will be allotted to each of these
classes, under the names of rent, profit, and wages, will
be essentially different, depending mainly on the actual
fertility of the soil, on the accumulation of capital and
population, and on the skill, ingenuity and instruments em-
ployed in agriculture."
Jevons, the English head of the " Austrian " school, opens
his book on the principles of political economy with the
following words: — "The science of political economy rests
upon a few notions of an apparently simple character.
Utility, wealth, value, commodity, labor, land, capital, are
the elements of the subject; and whoever has a thorough
THE LABOR THEORY OF VALUE AND ITS CRITICS. 89
comprehension of their nature must possess or be soon able
to acquire a knowledge of the whole science. As almost
every economical writer has remarked, it is in treating the
simple elements that we require the most care and pre-
caution, since the least error of conception must vitiate all
our deductions. Accordingly, I have devoted the following
pages to an investigation of the conditions and relations of
the above-named notions."
And the opening passage of Bohm-Bawerk's own book
on capital reads : — " He who possesses a capital is as a
rule in a position to derive from it a continued net income,
which income is known to science under the head of Rent
of Capital or Interest of Capital in the broader sense of the
term. This income possesses certain remarkable qualities,
it arises independently of any personal activity of the cap-
italist,— it comes to him even though he never raised a
finger to create it, and seems therefore most truly to flow
from, or according to an ancient simile, to be generated
by capital."
All of these great luminaries of the science seem to be
ready to lay down general laws governing human society,
without regard to time and place. They all seem to be
oblivious of the fact that the laws which they are about
to explain have no universal application and are limited to
a certain form of society, far from being universal in
space, and further still from being perpetual in time. Not
one of them seems to have given the slightest thought to
the fact that the phenomena which he was about to describe
and examine were part of a certain historical situation and
the result of a certain historical development. History,
with its actual, real facts and relations does not exist for
them. All the nations, all the ages, and all stages of hu-
man development are subject to the laws which they lay
down. To one of them, and that one the gpeat " modern "
Jevons, one of the great triumvirate of the " modern "
school (Jevons, — Menger, — Bohm-Bawerk), the laws of
political economy are not only extra-historic but extra
90 THE THEORETICAL SYSTEM OF KARL MARX.
everything else that has a semblance of reality, and reduce
themselves to a few purely logical " notions," a correct
" conception " of which gives one the key to the science of
political economy quite irrespective of the knowledge of the
facts of life, which seem to be an entirely negligible quan-
tity to our great " modern " scientist.
Contrast with all this the opening sentence of Marx's
Kapital: — " The wealth of those societies in which the cap-
italist mode of production prevails presents itself as an im-
mense accumulation of commodities." With one mighty
stroke of the pen all the conditions and limitations of the
problem are given, the picture put in its historical setting!
No soaring in the air, superior to space and time. No gen-
eralizations that may fit everything in general and nothing
in particular. But a real, live situation, with a definite
burning problem. No wonder that instead of losing him-
self in generalities or wasting himself on definitions of all
sorts of " conceptions " and " notions," he delves right into
the heart of the problem, and declares immediately that
" our investigation must therefore begin with the analysis
of a commodity." This he immediately proceeds to do.
And how he does it !
To be sure, he does not do it to the entire satisfaction of
his critics, but we shall see that this is due mainly to failure
on their part to understand his work, as is the claim of
Bohm-Bawerk about the supposed purely logical argument
employed by Marx. Where these critics do understand
Marx, their dissatisfaction with his argument is due to their
lack of knowledge of the subject itself.
Solonimski, for instance, objects to Marx's analysis for
the reason that in this analysis " the conception of labor
becomes independent of the purposes and necessities for
which it was undertaken," and the value created by labor
" becomes an independent quality inherent in the commodity
irrespective of its usefulness and exchange-value." Aside
from the evidently absurd statement that according to Marx
the exchange-value of a commodity is inherent in the com-
THE LABOR THEORY OF VALUE AND ITS CRITICS. 9!
modity irrespective of its exchange-value (Marx knows of
only two kinds of value: use-value and exchange-value,
and wherever he says simply " value " he means exchange-
value), the statement contains some important inaccuracies.
To begin with, Marx never forgets the " purposes and
necessities " for which production is undertaken. Quite the
reverse: this thought is ever present in his mind, and it is
idue to this very fact that Marx did not fall into some of
the grievous errors into which his critics, particularly the
" moderns," have fallen. These gentlemen talk of the
" psychological " motives of exchange as the cause and
measure of value, all the time forgetting that before a com-
modity can be exchanged it must be produced, and that
there must therefore be, first of all, " psychological " motives
of production which ought to be of some considerable inter-
est. Not so with Marx. He always remembers that in our
capitalistic system (be it remembered: Unlike his critics,
Marx never talks of eternity, but of the present capitalistic
system) production is undertaken for the purpose of profit.
This implies two things: First, that the producer does not
produce the thing for its use-value, he does not give a snap
for that, it is absolutely useless to him, and he will just as
soon manufacture chewing-gum as Bibles. — And, second,
that he knows in advance, or at least thinks he knows, the
value of the product he is going to produce ; in other words,
he knows that the value of his product will depend on some-
thing more substantial and rational than the whimsical
" desire " of the prospective purchaser based on some in-
dividual, " psychological " motivation. And this knowledge
on the part of Marx of the purposes of capitalistic produc-
tion had something to do with his abstracting from the useful
qualities of the particular commodities when examining their
exchange-value, as well as with his refusal to follow Bohm-
Bawerk's advice to arrive at the laws of exchange-value by
way of an examination of the " psychological " motives of
exchange.
It is also somewhat inaccurate to say that, according to
92 THE THEORETICAL SYSTEM OF KARL MARX.
Marx, exchange-value is inherent in a commodity, or that
it is independent of its usefulness. Marx, as we have al-
ready seen, specifically says that exchange-value is not some-
thing inherent in a commodity, that it could not be inherent
in it, for it changes with social relations; that the whole
thing is merely the expression of a social relation and ap-
pears only under a certain social system. Marx also says
specifically, as also already stated, that no commodity can
have exchange-value without its having use-value, that use-
value is the substratum of exchange-value, although it is
neither its cause nor its measure. But then, — Marx con-
tradicts himself! Poor Marx! he contradicts himself so
much and so radically that one is forced to the conclusion
that he must have been a raving maniac, and one is surprised
to see the big regiment of these very learned and clever
gentlemen bothering with the scribblings of such a poor
wretch.
Bohm-Bawerk, who thinks that Marx's was one of the
greatest minds that applied themselves to this subject, also
finds great comfort in Marx's supposed neglect of usefulness
as influencing the exchange-value of commodities. He does
not say that Marx contradicts himself, but he thinks that he
caught Marx in a mental faux pas. Indeed, this is one of
the greatest, if not the chief point, in his whole argument
against Marx's analysis of a commodity, by which he ar-
rives at his labor theory of value. Marx says:
" The exchange-values of commodities must be capable
of being expressed in terms of something common to them
all, of which thing they represent a greater or less quantity.
This common " something " can not be either a geometrical,
a chemical, or any other natural property of commodities.
Such properties claim our attention only in so far as they
affect the utility of these commodities, make them use-
values. But the exchange of commodities is evidently an
act characterized by a total abstraction from use-value.
Then one use-value is just as good as another, provided,
only, it be present in sufficient quantity. ... As use-
THE LABOR THEORY OF VALUE AND ITS CRITICS. 93
values, commodities are, above all, of different qualities, but
as exchange-values they are merely different quantities and
consequently do not contain an atom of use-value. If, then,
we leave out of consideration the use-value of commodities,
they have only one common property left, that of being
products of labor. But even the product of labor itself has
undergone a change in our hands. If we make abstraction
from its use-value we make abstraction at the same time from
the material elements and shapes that make the product a
use-value; we see in it no longer a table, a house, yarn, or
any other useful thing. Its existence as a material thing
is put out of sight. Neither can it any longer be regarded
as the product of the labor of the joiner, the mason, the
spinner, or of any other definite kind of productive labor.
Along with the useful qualities of the products themselves,
we put out of sight both the useful character of the various
kinds of labor embodied in them, and the concrete forms
of that labor, there is nothing left but what is common to
them all ; all are reduced to one and the same sort of labor,
human labor in the abstract."
To which Bohm-Bawerk : " How is that ? Where is
the difference between labor and utility? While it is true
that in the exchange relation of commodities the particularly
useful qualities of tfie articles exchanged do not matter,
the general usefulness of the commodities is not abstracted
from. On the contrary, it remains common to them all. It
does not matter whether the commodity can be used as an
eatable, wearing-apparel, or for shelter, but it does matter
that it be of some use, of use in general. Why, then, is
utility rejected as a cause arid measure of exchange-value,
why is it ' abstracted ' from ? Again, when considering
labor Marx is compelled to abstract from the particular kind
of labor contained in the commodity, so that what is left to
all commodities in common is general labor, labor in the ab-
stract. Just as there still remains in common to all of them
general usefulness, usefulness in the abstract. Why, then,
this partiality for labor as against usefulness? Where is
94 THE THEORETICAL SYSTEM OF KARL MARX.
the reason for the discrimination in favor of the one as
against the other, which makes the one the sole cause and
measure of value, and denies to the other any influence
whatever on this phenomenon ? " And all this with such
an amount of emphasis, that if it depended on that alone, the
whole Marxian theoretical edifice would be smashed to pieces,
which Bohm-Bawerk naively imagines that he does.
We do not presume to know whether Marx was ever em-
barrassed by these questions. But we venture to say that if
he ever were, and all the resources of logic failed him, he
had only to turn to the purposes of capitalistic production to
be relieved of any difficulty. Slonimski touched a sore spot
of anti-Marxism when he broached the subject of purposes
of production, which his more discreet colleagues usually
pass in silence. We have already dwelt on the subject at
some length, but it is of such paramount importance that
we cannot dwell upon it too much or recur to it too often.
Before commodities are exchanged, they are produced.
They are produced, however, with a view to their exchange,
and to the value to be realized on such exchange, and in the
exchange itself the question of how, and in what manner the
commodity was produced has a good deal to do with the
fixing of its value. It is not, however, the question of the
usefulness of the production that is considered. We have
already mentioned that a capitalist will just as soon manu-
facture chewing-gum as Holy Bibles. But more than that.
The purposes of the production of commodities being the
realization of a profit, a capitalist will just as willingly manu-
facture an absolutely useless article, if he will be assured of
a profit. He does not manufacture absolutely useless things,
because in order to get a purchaser it must be of some use
to somebody, but he personally does not care a rap whether
it really is useful or not. Again, when the article is of
some use to somebody, that is, salable, he does not care a
bit about anything that goes to make it useful. This is
absolutely indifferent to him. He will manufacture any
shape, color, taste or other quality, and when he comes to
THE LABOR THEORY OF VALUE AND ITS CRITICS. 95
exchange it, — sell it — he will not be concerned a bit
whether the commodity he produced and is about to ex-
change is white, black, orange, or any other color; whether
it is square, round, pointed or any other shape; sweet, sour,
fragrant or otherwise; hard or soft, or whether it possesses
any other quality which may determine its particular use-
fulness. But he will care how much labor it contains ! This
can readily be seen in our " advanced " methods of doing
business when goods are " ordered," that is, sold — ex-
changed— before they are produced. In making the sale-
exchange the producer will comply with any request as to
shape, color, taste, or any other natural quality which affects
the usefulness of the commodity with alacrity, as it is a mat-
ter of complete indifference to him. But he will stand
out against anything that will require him to put into the
commodity more labor. In taking your order — exchang-
ing in prospecto his goods for yours — he will " abstract "
from any and all natural qualities upon which the useful-
ness of the commodity depends, but he will absolutely refuse
to " abstract " from labor, .and will doggedly insist on con-
sidering it when making valuations. Further, he will gladly
" abstract " from the kind of labor. If he is willing to give
you for a certain price the labor of, 'say, one hundred men
for ten days, he will just as soon give you the product of the
labors of tailors as of shoemakers. But he will make a
stand on the question of the quantity of labor. He wouldn't
give you any more than he can help.
These actual " experiences " of the exchange relation
which we have recounted are perfectly represented in
Marx's "logical " analysis, with which Bohm-Bawerk finds
fault. It is true that as regards both labor and usefulness,
we " abstract " in the exchange relation from the particu-
lar, the particular labor and the particular^usefulness, and
leave only the general labor and the general usefulness. But
in abstracting from the particular utility we have abstracted
from the quality of the utility and have shown the exchange-
relation to be a purely quantitative relation. But general
96 THE THEORETICAL SYSTEM OF KARL MARX.
usefulness cannot be measured as to quantity. It is hard
to measure qualities unless they are of the same kind. But
it is absolutely impossible to measure the general, abstract
usefulness of different things. How do you find the dif-
ferent amount of usefulness contained in a piano as com-
pared with a suit of clothes, of an extension-table as com-
pared with an engine-boiler? How do you measure general
usefulness? If you cannot measure it, it cannot serve as a
measure of value. And if it cannot serve as a measure of
value, it cannot be the cause of value, for we judge the
cause of value from the changes in value as shown by the
measure of value. We find the very existence of value only
because of its measure. Besides, the residuum of general
usefulness which remains after we abstract from the par-
ticular useful qualities, is not general usefulness to the par-
ties concerned in the exchange, and who fix the exchange-
value, but general usefulness to somebody, that is to society
at large. For the parties exchanging the commodity it has
no use-value whatsoever.
Not so with labor. When we abstract from the particular
labor contained in the commodity we abstract only from
the kind of labor, that, is, from its quality, but not from its
quantity. And it is just the quantity that we want, as the
exchange of commodities »> a quantitative relation. And
this quantitative relation of labor exists for these very peo-
ple who enter the exchange relation. Abstract, general, hu-
man labor can be measured quantitatively, and quantita-
tively only. That is why Marx's analysis is perfect. Ab-
stract human labor, irrespective of the particular quantities
of the labor employed to produce this commodity, abstract
human labor, whose only measure is time, is the cause and
measure of exchange-value.
Marx, however, never rests his case on a purely logical
argument. Logic is to him only an instrument to the proper
analysis and understanding of the actual facts of " experi-
ence." We have seen that, as a " logical " proposition, use-
fulness is entirely eliminated from value. But we have
THE LABOR THEORY OF VALUE AND ITS CRITICS. 97
seen from our examination of the " experiences " of the ex-
change relation that there is some residuum of usefulness,
general usefulness to society, which plays some role in it.
We have seen both as a matter of logic and of experience
that it is not, nor could it be, either the cause or the meas-
ure of value. What, then, is its role? True to himself,
Marx would not leave any actual fact unaccounted for. It
is absolutely untrue that Marx disregards usefulness as a,
factor of value. Notwithstanding the fact that this is as-
sumed by every critic of the Marxian theory of value, it is
absolutely and unqualifiedly untrue, and is only one addi-
tional link in the long chain of proof that an absolute lack
of understanding of the Marxian doctrine seems to be the
first qualification of a modern Marx-critic.
General, social usefulness has some influence on exchange-
value. It is not its cause nor its measure. What is it?
It is its limitation. The facts of exchange, the " experi-
ences " of the " exchange-relation," prove that general, social
usefulness, the only usefulness which plays any part in the
exchange of commodities under our capitalistic system, is
neither the cause nor the measure of exchange-value, but
its limitation. And this is borne out by Marx's very " log-
ical" analysis,, which so much aroused the ire and indigna-
tion of Bohm-Bawerk that he almost forgot the respectful
attitude which he usually assumes towards Marx. This
result of experience and analysis is one of the main features
of Marx's theory of value, that feature which more than any
other, stamps it as peculiarly his own. We have already
seen that, according to Marx, it is not every labor that cre-
ates value, but socially necessary labor. We have also seen
already that Marx's conception of " socially necessary " in-
cludes the general as well as the relative usefulness of the
commodity to society. That is why, according to the Marx-
ian theory, the value of a commodity is not measured by
the labor actually contained in a commodity, but the labor
socially necessary to reproduce it. In the last chapter we
have seen the historical basis of Marx's theoretical conclu-
98 THE THEORETICAL SYSTEM OF KARL MARX.
sions, now we see their logical and " experimental " justifi-
cation.
Strange as it may seem, the very critics who are most
vehement in the denunciation of Marx's so-called abstrac-
tions as unwarranted, and his supposed disregard of the
" category " of usefulness as unpardonable, are at the same
time raising an outcry against Marx for his insistence that
only " socially necessary " labor is the cause and measure
of value ! With all their astuteness they cannot see the
very simple fact that Marx does include usefulness as a fac-
tor of value, and that this very inclusion, which they
loudly demand, accounts for the " socially necessary " which
they no less loudly abjure ! Indeed, none are so blind as
those who will not see. *
II.
We have seen the baselessness of the chief objections to
Marx's analysis by which he comes to regard labor as the
" common something " of all the commodities which must
be the cause and measure of value. The objections noted,
while the most important, are not, however, the only ones.
There are other objections urged against this analysis by
Bohm-Bawerk himself as well as by the noted German
economist, Professor Carl Diehl, not to speak of our old ac-
quaintances, L. Slonimski and Professor Masaryk. We will
attempt to exhaust the list and to pay our respects to all of
them but one, who will be pointed out; and that one will
not be considered here for the reason that certain other
phases of the Marxian theory must be explained before the
objection and the answer thereto can be properly appreciated.
This task will, therefore, be left for the next chapter, which
will be specially devoted to it. We refer to the so-called
" Great Contradiction " between the Marxian theory of
value and the theory of the Uniform Rate of Interest. In-
cidentally, we will have occasion to examine into the sup-
posed contradictions between the first and third volumes oi
" Capital."
THE LABOR THEORY OF VALUE AND ITS CRITICS. QQ
In discussing these objections we will have to pursue the
course adopted by us of following more or less closely on the
heels of Bohm-Bawerk, except where others specially claim
our attention.
The first objection to be noted here is, that Marx's analysis
must, of necessity, be faulty, for the reason that the field of
his investigation was not broad enough; that he did not
take as the subject of his analysis all " goods " which may
be the subject of exchange, but only " commodities," that is,
goods created by labor. It is claimed that by thus limiting
his analysis from the outset to the products of labor only,
he prejudged the case and forced the result of leaving labor
as the only " common something," and that if the analysis
were to be made on all exchangeable " goods " the result
would be different. As Bohm-Bawerk puts it : — Marx pur-
posely puts into the sieve only those things which can get
through it. And he adds : — " Marx is careful not to give us
any explicit statement of the fact that, and the reason why,
he began his investigation, by excluding therefrom a part
of the goods possessing exchange-value."
It will be noticed that Bohm-Bawerk does not use the
word, " analysis," but " investigation." This is one in-
stance of the careless use of terms for which all Marx
critics are well noted. While seemingly a mere trifle, this
interchange of words is, in reality, a matter of quite some
importance. An analysis is a purely logical operation used
as a means to show the logical counterpart of some actual
phenomenon. It serves to formulate, by bringing into play
our powers of abstract reasoning, a general conception of
the mass of particular facts. While, therefore, analysis is a
helpful means in arriving at a generalization, it is no proof
of its correctness. On the contrary, it is the correctness of
the generalization that is usually the best prpof of the fault-
lessness of the analysis. The mastery of a subject will be
shown by the ability to recognize which phenomena are most
typical for the subject-matter under consideration. But this
can not be found out from the analysis itself, but must be
IOO THE THEORETICAL SYSTEM OF KARL MARX.
gathered from outside sources. The best proof of the typ-
icalness of the phenomena selected for analysis is usually
obtainable only after the analysis has been completed, the
generalization obtained, and the stage of proving the gen-
eralization arrived at. The proof of the generalization, if
the same be correct, will itself reveal these typical phe-
nomena.
Any analysis will, therefore, be justifiable, which will
serve this purpose of arriving at a proper generalization.
In making the analysis, therefore, we must not be guided
by the " equitable " claims of different phenomena to be
analyzed, but merely by ihe one consideration : to find those
facts the analysis of which will best serve the purpose for
which the analysis is undertaken. Usually, it is not the
analysis of the greatest number of phenomena, but of the
most typical phenomena that will serve the purpose best.
We have already seen in a preceding section that Marx
had ample historical and logical justification and warrant
to assume that the factory product was the most typical of
the exchange-value-possessing commodities, and therefore,
the most proper subject for his analysis. Just as, to bor-
row an example from another province of scientific research,
in order to obtain exact knowledge of the chemical composi-
tion of water, we must not analyze as many sorts of water as
possible, but, on the contrary, only one sort of it, the most
typical, that is, pure unalloyed water. The proof, however,
of the correctness of his assumption is furnished by the same
facts 7i7//V/z prove the generalization which is the result of
the analysis. For, as we have already stated before, Marx
does not depend on this analysis, nor on any other purely
logical operation, to prove His theory, but on the facts them-
selves. In order," however, that the facts should prove any-
thing, all the facts had to be examined and investigated.
And if Bohm-Bawerk's statement were true that Marx did
not include in his investigation all " goods " possessing ex-
change-value, his theory would remain unproven, — and if
the excluded " goods," upon investigation, would prove
THE LABOR THEORY OF VALUE AND ITS CRITICS. 101
something else than those included, his theory would be ab-
solutely refuted.
Fortunately for Marx, however, and unfortunately for
Bohm-Bawerk, Marx did thoroughly investigate these very
" goods," " which possess exchange-value although they are
not the product of labor," under which cloudy description is
meant the soil, and other "natural" objects which are the
subjects of bargain and sale. Not only is Marx's inves-
tigation of this particular branch of the subject thorough
(it occupies about 200 pages of his book), but his theoretical
explanation thereof is so convincing, that none of his critics,
not even Bohm-Bawerk, have ever as much as attempted
to refute it. We think, therefore, that we are very char-
itable to Bohm-Bawerk when we assume that he really did
not mean to say that Marx excluded these particular
" goods " from his investigation, but merely from his analy-
sis; and that he simply fell a victim to the deplorable lack
of precision which seems inseparable from all Marx-crit-
icism.
We must add, however, that we dwelt at such length on
this point not merely because we were anxious to " show
up " the carelessness of terminology and lack of precision
of thought, in even the greatest of Marx-critics, important
as this may be, but because the subject-matter involved in
this objection is of great importance in the opinion of all
Marx-critics, as well as our own. It really amounts to this :
— that the labor-theory of value does not take " nature "
into account or consideration ; " it denies the participation of
nature in the production of goods." Now, this, if true, is a
very serious charge. The denial of the participation of
nature in the production of " goods," or anything, for that
matter, is so manifestly absurd that it will vitiate any argu-
ment, analysis, or other logical operation, into which it
enters. Could Marx have been guilty of anything like that ?
Countless expressions of Marx show that he was not ig-
norant of the participation of nature in the production of
"goods," if proof is necessary that Marx knew of the exist-
102 THE THEORETICAL SYSTEM OF KARL MARX.
ence of nature, because that is what this charge amounts to.
How, then, did he deny it? How could he deny it? Well,
of course, he couldn't. And ... he didn't! We quote
Bohm-Bawerk: "That they (commodities) are just as
much the product of nature as of labor — nobody says more
explicitly than Marx himself when he says : — ' The bodies
of commodities are combinations ^f two elements, natural
matter and labor ; ' or, when he cites with approval Petty's
remark that: — 'Labor is the father (of material wealth),
and the earth is its mother.'" The guileless reader is evi-
dently puzzled. But there is really nothing to be puzzled
about. Marx is simply at his old game of contradicting
himself in the most stupid manner imaginable.
If Bohm-Bawerk himself were not so careless and slov-
enly in his expressions, he would have noticed that when
Marx speaks of the " participation " of nature .he always re-
fers to the " bodies " of commodities, or " wealth " ; and
when he speaks of labor as its source of measure, it is al-
ways exchange-value that he has reference to. Marx does
not claim that labor is the only source of wealth. On the
other hand, he does deny the " participation " of nature in
the creation of exchange-value. And rightfully so. Na-
ture, including all the material substances and forces which
go into the production of " goods," has always existed, and
remains unchanged. So has " wealth " (meaning in this con-
nection an aggregation of useful articles), at least as far as
we are concerned. Not so with exchange-value. Notwith-
standing the existence of " nature " from time immemorial,
and the application of labor thereto from the very beginning
of the human race, this combination has failed to produce
exchange-value, which makes a commodity out of a mere
" good," until the appearance of the capitalistic system. It
is evidently something connected with the capitalistic system,
and not " nature," that is responsible for this result and
should be called upon to " account n for it. That is why
Marx went in search of the social phenomenon which distin-
guishes the capitalistic system from its predecessors, as was
THE LABOR THEORY OF VALUE AND ITS CRITICS. IOJ
already explained at length in a preceding section. It is
interesting to recall here, however, that we have encountered
the same trouble over Marx's supposed neglect of " nature "
when discussing the Materialistic Conception of History.
An additional proof of the monism of the Marxian System,
and of the opinion oft expressed here that all Marx-criticism
suffers from the same vices.
In justice, however, to the Marx-critics, it must be stated
right here that some of Marx's own adherents, or supposed
adherents, suffer from a good many of these vices. We
shall have occasion hereafter to treat this subject more at
length. Here we want to refer only to a historical inci-
dent, which is right in point, and at once illustrates the
prevalent carelessness in the choice of expressions, and
Marx's quickness to " sit on them " wherever they are
found, without any bias to friend or foe. In 1875 the social-
ists of Germany adopted a program at their national con-
gress, held at Gotha, the opening sentence of which read:
" Labor is the source of all wealth and of all culture." On
learning of the contents of the draft proposed by the lead-
ers Marx wrote a letter containing some annotations. He
started out by quoting the opening sentence quoted by us
above, and made it the occasion for the following remarks:
" Labor is not the source of all wealth. Nature is just as
much the source of use-values (and it is of these that ma-
terial wealth consists), as is labor, which is itself the mani-
festation of a natural force, — human labor power."
There are other objections to Marx's analysis. This time
not to what goes into the analysis, but as to its result. In
commenting on Marx's statement that aside from the use-
value of their bodies, commodities have only one common
property left, that of being products of labor, Bohm-
Bawerk asks : " Is that really the only common property
left? Have not the exchange-value-possessing "goods"
still left to them, for instance, the common property of be-
ing scarce in comparison with the want for them? Or, that
they are the subject of supply and demand? Or, that they
104 THE THEORETICAL SYSTEM OF KARL MARX.
are appropriated? Or, that they are "natural" products?
And then he adds : " Why, then, could not the principle of
value lie just as well in any one of these common prop-
erties, instead of that of their being the products of labor?"
The last question, that of " Nature," has just been disposed
of by us. The one preceding it, that of " appropriation," is
a rather curious one to be broached by an anti-Marxist of
the Bohm-Bawerk type, for it suggests a lot of discussion,
which may prove uncomfortable to those who have " appro-
priated " to themselves everything, and we may yet return
to this phase of the question. For the subject of our pres-
ent discussion, however, the question of " appropriation "
is beside the point. To begin with, being appropriated is not
a property but a condition or relation, and that not of the
" goods " themselves, but of men with reference to them, so
that being " appropriated " could evidently not be a common
property of the " goods." We will not stand, however, with
Bohm-Bawerk on small matters like that, for as we have
already seen, precision of expression is not part of his equip-
ment. But whether property, condition, or relation, or any-
thing else, " being appropriated " is no objection to Marx's
analysis. The "principle" of "value" of "goods" could
not " lie " in their " being appropriated," for the same rea-
sons that it could not be due to " nature." While " goods "
were not " being appropriated " for quite as long a time as
they were being produced by nature, they were so for suffi-
ciently long a time before the appearance either of the capi-
talistic system or exchange-value to settle the question.
Being " scarce " or being the subject of supply and de-
mand, can hardly be said to be something which all " goods "
possess in common. But as we have already stated, we
wouldn't stand with Bohm-Bawerk on such things as pre-
cision of expression and other requirements of logical rea-
soning. There is, however, something else about these two
questions to which we desire to call the attention of the
reader: These two questions are really one; being scarce
in comparison with a want is the same thing as being the
THE LABOR THEORY OF VALUE AND ITS CRITICS. 10$
subject of supply and demand. Why, then, put this up as
two separate questions? This would be unimportant, but
because of the frequency with which, as we shall have oc-
casion to see later, Marx-critics employ this cheap manoeuvre
of " criticism." It is common practice among them to re-
peat the same matter in different ways, in such a manner as
if they were stating separate objections, in order to make a
" showing " by filing up a great quantity of objections.
Supply and demand is, as we have seen, not a property of
" good " but an accident of its existence. It is not some-
thing contained in it, nor is it anything in any way con-
nected with its production. Its qualities and properties as a
" good " are not in any way affected by the conditions of its
supply and demand. There is no " common something " in
goods which may be called their conditions of supply and
demand, for no good contains in itself the conditions of its
supply, and its demand can not only not be contained within
itself, but it presupposes its absence. Logically, therefore,
it could certainly not be said that being the subject of sup-
ply and demand could be the " common something " which
is the source and measure of value. There is another good
logical reason why supply and demand could be neither the
source nor the measure of value. The proposition that
value depends on supply and demand seems such a very sim-
ple one, so much a matter of "common sense," that few
take the trouble to inquire into* its real meaning. A careful
examination of the matter will show, however, that this is
logically impossible. Let us see what it is: Supply and
demand work in inverse directions ; when the supply in-
creases value diminishes, and when the supply diminishes
value increases ; and the reverse is true of demand. Now,
let us suppose a condition (the ordinary condition for most
goods), where the supply and demand are normal, that is,
cover each other. What should the value^of the commod-
ity then be? Evidently, nil; for the two factors working
upon it in opposite directions, the supply and the demand be-
ing equal, neutralize each other, balance each other. But as
IO6 THE THEORETICAL SYSTEM OF KARL MARX.
we know that " goods," or at least some " goods," and that
the most characteristic, always have some value, there evi-
dently must be something which causes commodities to have
value when supply and demand balance each other, and
have, therefore, no influence.
This question of logic is best explained and tested by the
facts. Value is a relative term, and is ascertained by ex-
change. When we speak of the value of a commodity, \ve
compare it with something else; in our highly developed
society, we compare it with the universal commodity —
money. When we make a sale or exchange we compare
the values of the things exchanged by exchanging them in
a certain proportion. Let us, therefore, take any two com-
modities, say, a chair and a table. Let us say that under
any given conditions of supply and demand equal for both,
say normal, they exchange at the ratio of two chairs to one
table. What fixes their relative value? The conditions of
supply and demand being the same for both, they ought to
exchange as one to one. Again, let us increase their sup-
ply equally, say fifty per cent. Their " value " will dimin-
ish,— in comparison with other articles whose supply was
not increased, — but their relative value to each other will
still remain the same. The same thing will happen if, in-
stead of increasing their supply we will diminish it; or, if
we will increase the demand or diminish it. In other words,
no matter under what conditions of supply and demand we
will place them, as long as those conditions are equal, they
will still retain their relative value of two to one. Evidently
there must be something in them which makes their rela-
tive value remain the same under all conditions of supply
and demand to which they may be alike subjected. What
is it?
It was to find this " common something " contained in
them, and which evidently is the source and measure of their
value irrespective of the conditions of supply and demand to
which they are subject, that Marx took up the analysis of the
commodity. It was, therefore, simply puerile to point to
THE LABOR THEORY OF VALUE AND ITS CRITICS. 107
supply and demand as the possible " common something "
" wherein may lie " their value.
Again, the same commodity, under the same conditions o|
supply and demand, will have different values at different
times if the methods of its production have changed. A
fact which practically fills up the history of modern pro~
duction.
The reader might ask : " While it seems to be true that
supply and demand cannot be the source or measure of
value, it is still a matter of experience, — and appears in
the very examples examined here, — that the condition of
supply and demand does influence the ratio of exchange of
commodities, that is, their value. How do we account for
it?" This consideration seems to be what led astray many
economists. In fact, the matter does seem extremely con-
fusing. It is evident that value must have some source out-
side of supply and demand, and yet there is no denying the
influence of the latter on the ratio of exchange which fixes
the relative values of commodities. This confusion is only
apparent, however, and not real. It is due to a failure to
distinguish between the value of commodities and the prices
which they bring on a particular sale in the market.
We have already explained at length in a preceding chap-
ter that value and price are different and distinct categories.
This distinction must always be kept in mind, and a failure
to keep this in mind will result in no end of confusion.
When this distinction is borne in mind it will at once become
apparent that the seeming influence of supply and demand
on value is a mere optical illusion. What it does influence
is the Price, which oscillates about the value as its normal
resting place, to which it constantly gravitates. That is
why, when supply and demand cover each other, the price is
not nil : it is then at its normal resting-place, — Value ; Price
and Value then coincide. That is why different articles will,
under the same conditions of supply and demand, exchange
in an infinite number of ratios to each other, as the same
conditions of supply and demand will only result for all of
108 THE THEORETICAL SYSTEM OF KARL MARX.
4
them in the same relation between Price and Value, but the
actual price of each will depend on its own value which may,
of course, be different for each. That is, in fine, why the
same commodity will, under the same conditions of supply
and demand, have a different price at different times, if
there has been any change in the method of its production ;
for its value depends on its production, and will be different
if different methods of production are employed, and the
equal conditions of supply and demand will only bring about
the same relation between Price and Value.
Many opponents of Marx make a point of the fact that
Marx's theory of value does not show the formation of
prices, is no guide to the actual prices paid for commodities.
But a theory of value need not show that, and, as a matter
of fact, could not. It would not be a theory of value if it
did. This is admitted even by one of Marx's greatest oppo-
nents, Professor Carl Diehl. He says : x
" It must be settled right at the outset that for Marx, as
for any other theorist on the subject of Value, there can be
no identity between Value and Price. This follows neces-
sarily from the radical difference between the two concep-
tions. The price of a commodity is a concrete quantitative
.determination: it shows us the quantity of goods or money
which must be given in return for this commodity. Value,
on the other hand, is an abstraction. When we speak of
the value of commodities, we mean the regulative principle
which lies at the basis of the formation of prices." This is,
in effect, what Marx says in the passage already quoted by
us. And the facts of experience, as we have seen, amply
justify his position. It is with this, as with other appeals
to the facts, some of which we have already disposed of, and
others are to be gone into hereafter, for Marx-critics never
tire of the assertion that the facts always and completely re-
fute Marx.
" Experience shows," — says Bohm-Bawerk, — " that the
1 Carl Diehl, Ueber das Verhaeltnis von Wert und Preis im Ockonomii-
eben System von Karl Marx. Jena, 1898.
THE LABOR THEORY OF VALUE AND ITS CRITICS. IOO,
exchange value of goods stands in any relation to the amount
of labor expended in their production only in a portion of
them, and in that portion only incidentally. . . . We
shall see that the ' exceptions ' are so numerous that they
hardly leave anything for the ' rule.' " Then comes a long
list of " experiences " and " exceptions," which we will con-
sider one by one, so that none escape our attention. It must,
however, always be borne in mind that Bohm-Bawerk is not
alone in these statements, assertions, objections and excep-
tions. On the contrary, he is ably supported by a large host
of comrades in arms, who do not tire of blowing the big
horn about what the facts are supposed to show.
And first of all " nature " looms up large again. We
have disposed of her logically, but she still remains there to
vex us in practical " experience." Not that any exchange-
value is claimed for nature as such. All the bounties of
nature are admitted to be as free as the air, provided there
is as much of them; but, it is claimed, when natural objects
are scarce, they have exchange-value, although no labor
whatever was expended on them. " How about the native
gold lump which falls down on the parcel of a landed pro-
prietor as a meteor ? or, the silver mine which he accidentally
discovers on his land ? " asks Bohm-Bawerk. " Will the
owner be unmindful of nature's gift, and let the gold and sil-
ver lay there, or throw them away, or give it away as a gift
again, only because nature gave them to him without his
exerting himself?" "And why is it that a gallon of fine
Rhine wine is valued at many times the value of some cheap
grade of wine, although the work of producing them may be
the same ? " And Professor Knies asks : when a quarter
of wheat is equivalent in exchange to a cord of wood, is
there any difference between the wood produced by human
labor in an artificial grove and that which grew wild in the
primeval forest ? x And Professor Masaryk chimes in :
" Why is virgin soil bought and sold ? "
As will have been noted, all the examples upon which
1 Karl Knies. Das Geld, p. 121.
110 THE THEORETICAL SYSTEM OF KARL MARX.
these objectors rely are drawn from the sphere of agricul-
ture, except, of course, when they are taken from the air,
like the golden meteor. Yet, they comprise two different
categories of objects. In the one category are to be placed
those objects whose attainment without labor is purely ac-
cidental, and in the other those whose attainment without
labor is the only way in which they are attainable, for the
reason that they can not be produced by labor at all. The
value of the articles of the first category does not contradict
the general laws of value as they are laid down by Marx,
nor does it even form an exception to the rule. The gold-
lump accidentally found by a man will not be thrown away,
no matter whether it was lost by somebody who spent labor
for its production, or fell down from the clouds, for the
reason that it has just as much value as if he had obtained
it by hard labor. Its value, like that of all commodities, is
the socially necessary labor which must be spent in its repro-
duction. The clouds not being in the habit of showering
gold on us, and the necessarily prevailing method of obtain-
ing gold being by spending labor on its production (strictly
speaking, — on its extraction, as in the case of all products
of the extracting industries), this gold, if wasted, as sug-
gested by Bohm-Bawerk, could not be obtained again from
the clouds, but would have to be produced by labor. The
same is true of the silver found in the mine. Assuming, as
Bohm-Bawerk seems to, that the mine was of such a char-
acter that it did not require any labor to extract the silver
from it, the silver will still have the value represented by the
labor socially necessary for its reproduction, owing to the
fact that silver is usually obtained by working at its extrac-
tion. And it might as well be noted here, that, under the
laws of Value as laid down before, it is the least productive
silver mine necessarily in operation in order to satisfy the
wants of society, that will set the norm for the value of
silver, taking, of course, into consideration any by-product
which may be obtained from such mine while mining for
silver. The case of the wine is akin to that of the silver,
THE LABOR THEORY OF VALUE AND ITS CRITICS. Ill
It must be remembered that " good " wine only has a greater
value than " cheap " wine where it is wanted in society, —
just like silver. There are places where " good " wine is not
wanted ; and places where silver is not much in demand. In
such places " good " wine will not be considered of any more
value than " cheap " wine ; nor will silver be more valuable
than some " base " metal. In societies where " noble "
metals and " good " wines are wanted, these become the
objects of special industries, respectively. And just as the
labor expended on its extraction in the least productive sil-
ver mine sets the value on silver, because this mine must
be used for reproduction, so will the labor expended on the
production of good wine by cultivation of the least adapted
soil necessarily employed therefore set the value on good
wine, and for the same reason.
The same principle applies to the wood question. Where
the " natural grown " wood of the primeval forests is in-
sufficient to satisfy the wants of society and it has to be
" raised," it is the labor expended on the " raised " wood
that will set the value on all wood, and the wood of the
primeval forest will have the same value as the wood arti-
ficially raised, for the reason that it can only be reproduced
by means of raising; the cost of its reproduction is, there-
fore, the social labor necessary to be expended for " raised "
wood.
It is entirely different, however, with the articles of the
second category, chief and most typical among which is
land. Why should land upon which no labor was spent for
its production, and upon which no labor need or can be spent
for reproduction have value? With all that, however, this
does not refute Marx's theory of value. We have already
stated before that Marx went into the examination of this
subject at length, and formulated a theory which none of
his critics have even attempted to refute. Indeed, singu-
larly enough, this branch of the Marxian theory has been
passed Ly his critics with little or no comment. This the-
ory, however, amounts to nothing less than this : — that land
112 THE THEORETICAL SYSTEM OF KARL MARX.
as well as all other objects which are not produced by labor
has no value. This may sound strange in face of the fabu-
lous prices that we know are sometimes paid for land. But
these very fabulous prices are proof that the price paid does
not represent the value of the land but something else en-
tirely. Marx proves conclusively that rent is not the result
of the value of the land, and the price of land is admittedly
merely a " capitalization " of the rent. Marx calls atten-
tion to the fact, which is also mentioned by Bohm-Bawerk,
who, however, fails to draw therefrom the proper conse-
quences, that the price of land is a multiple of the rent by a
certain number of years, the number depending on the pre-
vailing rate of interest. In other words, it is not the value
of 'the land that the price nominally paid for it represents,
but the price of the rent. The transaction which formally
and nominally appears as a sale of land, is in reality merely
the discount of the rent. It differ,s absolutely nothing in
character from the purchase of an annuity, which is not an
exchange of present values but a mere banking operation.
This is well known to real estate operators.
The best proof, however, of the theory that land has no
value, is the fact that any amount of land can always be had
on the largest portion of our Mother Earth without the
necessity of paying for it. The query of Professor Masaryk,
supposed to be a refutation of Marx by "the facts,"- -" why
is virgin soil bought and soldN? " is to be answered: The fact
is that virgin soil is not bought and sold. It is only after
the soil has been husbanded and raped and has given birth
to the bastard rent that it becomes the subject of purchase
and sale, not before. And this fact ought to give the quie-
tus, once and for all, to the claim that objects not produced
by labor may still have value. It is true that it is pretty in-
convenient for us to get to a place where land is obtainable
without price because of no value, and that as far as we are
concerned the argument of the places where land is free
seems, therefore, far fetched. But, first of all, it is certainly
no fault of the Marxian theory that our capitalistic class
THE LABOR THEORY OF VALUE AND ITS CRITICS. 1 13
has abducted from the people all the soil, so that there is
none left either in its virginity or in the possession of lawful
husbandmen. And, secondly, we might ask the great host of
Marx-critics to point out one place on the face of the globe,
where a single article produced by labor can habitually be
obtained without giving an equivalent therefor. Not on
the whole face of this globe, nor even in the clouds or
among the stars where Bohm-Bawerk can get gold-lumps
free, can anybody find a place where chairs, coats or bicycles
can be gotten free. Evidently there is a difference which
the learned and astute Marx-critics failed to observe, but
which is nevertheless very interesting, and ought to be for
some people at least, very instructive.
There is another group of " commodities," which, al-
though of a different character, is to be considered in this
connection. This group includes all those things which, al-
though produced by labor, are essentially the product of
some higher natural gift or power, and are, therefore, ir-
reproducible by mere labor. This includes all works of art
and the like. Not being the subject of production or re-
production by labor they are, naturally, not subject to the
^aws of value. But some ingenious Marx-critics, the in-
domitable Bohm-Bawerk among them, find great cause for
rejoicing in this alleged " refutation " or " exception " to
the laws of value as laid down by Marx. Ever faithful to
their own confused nature and very consistently confusing
economics with everything alien to it under the sun, they
start out from their confusion of Value and Price, and add-
ing to it the confusion of economic price with the colloquial
application of the word price to every money-payment as a
consideration for something, they declare that the Marxian
theory of value must be false, for here are " goods " whose
" value " is evidently not determined by labor. It does one
good to see how these gentlemen who usually strut about like
peacocks parading their lofty " moral sense " and " ideal-
ism," and constantly berating the Marxists for their supposed
gross materialism and " levelling " tendencies, come down
114 THE THEORETICAL SYSTEM OF KARL MARX.
from their high perch and place their " ideal " wares on a
level with the grossest material things. Allured by the bait
of making a point against Marx, they insist that high works
of art embodying noble "ideas" are just as much "goods,"
" wares and merchandise " to be trafficked in as anything else
that comes down the pike in " due course of trade." The
willingness of these gentlemen to do so does not, however,
make commodities of the works of genius, any more than
their hypocritical phrases change the course of human prog-
ress. While the economic conditions of capitalist society re-
flect on the whole range of its ideas, creating there all sorts
of distorted and shapeless beings, nobody is crazy enough to
seriously apply the yardstick to these matters. While an
" art journal " may sometimes quote a price of a great work
of art because it " fetched " that much at a sale, no " dealer "
even will dare say that the Sistine Madonna is equal in value
to so many steam engines, or that a certain Raphael or
Rubens has risen in value since J. P. Morgan became an art
Macenas, thus augmenting the " demand." It is true that
the excesses of capitalism have tainted everything with a
mercenary spirit, and have made art the subject of traffic,
but this no more makes " wares " out of art-subjects than
the traffic in white slaves turns love and affection into mer-
chandise. Nor has the purchase-money paid for them any
more to do with the economic categories of price and value
than that paid to the harlot in compensation for her venal
favors.
A different situation is presented in the case of commodi-
ties which are the result of so-called skilled or higher classes
of labor. Masaryk thinks it a complete refutation of the la-
bor theory of value that one man's labor does not produce in
the same space of time as much value as that of any other
man's. And Bohm-Bawerk considers it awful theoretical
jugglery for Marx to say: " Skilled labor counts only as sim-
ple labor intensified, or rather, as multiplied simple labor, a
given quantity of skilled labor being considered equal to a
greater quantity of simple labor. Experience shows that this
THE LABOR THEORY OF VALUE AND ITS CRITICS. 11$
reduction is constantly being made. A commodity may be the
product of the most skilled labor, but its value, by equating
it to the product of simple unskilled labor, represents a
•definite quantity of the latter labor alone. The different
proportions in which different sorts of labor are reduced to
unskilled labor as their standard, are established by a social
process that goes on behind the backs of the producers, and,
consequently appears to be fixed by custom." " If," says
Bohm-Bawerk, " the product of one day's labor of one man is
of the same value as that of another man's five days' labor,
then, no matter how people consider it, it forms an exception
to the alleged rule, that the exchange-value of goods depends
on the amount of human labor incorporated in them."
These objections evidently proceed upon the theory that
Marx's " alleged rule " claims that the value of commodities
depends upon the amount of labor actually incorporated in
them in the process of their production. It is needless to
argue whether these objections would amount to anything
were this the " alleged rule," for the simple reason that no
such rule was ever " alleged " by Marx. We have already
seen, that Marx very specifically states that the value of a
commodity does not depend on the amount of labor actually
spent in its production. And this not only with reference to
skilled and unskilled labor, but even with reference
to unskilled labor itself. According to the Marxian
theory of value, as expounded by us above, it makes abso-
lutely no difference whatsoever, as far as its value is con-
cerned, how much labor, of any kind, was actually spent in
production of a commodity. The reason for this is, as al-
ready explained, that value, being a social phenomenon, de-
pends entirely on social conditions of production and dis-
tribution, and does not depend on anything relating exclu-
sively to the individual conditions of its production or ex-
change. This applies with equal force to the amount and
kind of labor it cost its individual producer, as well as to the
particular desires or wants of the persons immediately con-
cerned in any of its mutations during the circulation process.
t
Il6 THE THEORETICAL SYSTEM OF KARL MARX.
This being so, it is evidently absurd to make a point of the
fact that one day's work of a skilled laborer may produce as
much value as several days' work of an unskilled laborer, and
to consider skilled labor as an exception to the laws of value.
There is no exception, for there is no such rule except in the
perverted imagination of Marx-critics, and, perhaps, some
" alleged " Marxists. Were this " allegation " of the rule
correct, the exceptions would be too numerous to count. \Ye
have already noted before one such important " exception,"
for instance, in the case Of the introduction of improved
methods of production before they are generally adopted,
or the retention of obsolete methods of production. In either
event the value of the commodities produced under the ex-
ceptional circumstances by ordinary unskilled labor will not
depend on the labor actually spent in their production.
Other " exceptions " will easily suggest themselves to the in-
telligent reader. The only trouble with all of them is that
they are exceptions only to an imaginary rule, and not to the
rule laid down in Marx's theory of value. It is, therefore,
very sad to see how some Marxists spend their energies in
making futile attempts to explain away these objections to
an imaginary Marxian theory. They would spend their time
with more profit to themselves and their readers if they
would leave fancy theorizing and see to it that Marx's the-
ories are not misstated; the objections would then take care
of themselves.
The matter in itself is very simple. Skilled labor, whether
the skill be person.il with the producer, acquired by study
and training, or impersonal, due to the use of better tools,
is more productive. A skilled laborer produces in a given
space of time more than the unskilled one. The value of a
commodity being equal to the labor which it would cost to
produce it, the value of the commodity will, in accordance
with the laws of value already explained by us, be the amount
of ordinary average labor necessary for its reproduction.
For it is by this labor that society will have to reproduce it,
the amount of skilled labor being b/ its very terms limited,
THE LABOR THEORY OF VALUE AND ITS CRITICS. 1 17
and can not, therefore, be had in sufficient quantities to re-
produce the commodities as they are wanted. When this
labor becomes so common that it can be had in any quantity
for the purposes of production and reproduction of com-
modities, it ceases to be " skilled," and its product has no
more value than that of any other average labor. The point
to be remembered, however, is that while the measure of
ordinary labor is the time during which it was expended,
the measure of the time expended on any particular given
commodity is the amount of product produced by its expendi-
ture^ In other words, the value of a commodity does not
depend on the actual individual time spent in its production,
but on the social time necessary for its reproduction, as was
already stated at length before. When thus properly under-
stood, the fact that the product of skilled labor is more val-
uable than the product of unskilled labor is no more an objec-
tion or an exception to our law of value than the fact that
one man's unskilled labor produces more value than another
man's unskilled labor because of a difference in the in-
tensity of its application.
Another objection mentioned by Bohm-Bawerk, and the
last to be considered by us here, is very characteristic of him
and of most Marx-critics. They seem to be impregn^bly
fortified in their utter ignorance Of the Marxian theories
which they criticise. In their blissful ignorance they very
often prate like innocent children, so that one is often at a
loss as to whether they ought to be pitied or envied. Says
Bohm-Bawerk, very naively:
" The well-known and universally admitted fact that even
in the case of those goods whose exchange-value coincides
on the whole with the labor expended in their production,
this coincidence is not always preserved, forms another ex-
ception to the labor principle. Because of the oscillations
of supply and demand, the exchange-value bf even such com-
modities is* often pushed above or below the level of value
which corresponds to the amount of labor incorporated in
them. The latter forms only a gravitation point, not a fixed
Il8 THE THEORETICAL SYSTEM OF KARL MARX.
point of their exchange-value. It seems to me that the so-
cialistic followers of the labor principle make too light of
this objection. It is true that they state it, but they treat it
as a small, passing irregularity whose presence does not in
any way militate against the great ' law ' of exchange-value."
• The simplicity of soul displayed in this passage seems to
be of a higher world than ours. To intrude upon it with
gross earthly notions about accuracy and the like seems
almost criminal. It would also be manifestly futile to at-
tempt to explain the subtleties of Marxian thought to one
who, after a careful study of the Marxian system, has failed
to grasp the difference between Value and Price in that
system. To speak of the individual or actual Price (for
that is what Bohn-Bawerk refers to), which, according to
Marx, is usually different from Value, as an exception to
Value, reveals a constitutional inability to understand the
Marxian theory which ought to be admired, if not re-
spected, for its elemental purity. And yet this is the mind
which shows the way, and sets the pace, for the hosts of
Marx-criticism !
CHAPTER VI.
THE GREAT CONTRADICTION IN THE MARXIAN THEORY OF
VALUE.
We have seen in the preceding chapters that the facts
relied on by Marx-critics to " refute " Marx fail them sig-
nally when put to the test. These facts rather tally with
the Marxian theory. While, however, this may be suffi-
cient to parry the attacks of these Marx-critics and work
the discomfiture of all those who should attempt to attack
Marx with the weapons of " logic " and " facts of experi-
ence," this does not furnish the highest kind of positive
proof of the correctness of the Marxian theory, the proof
demanded by Marx himself and his followers. Marx and
the Marxists have often been reproached for being too
strict and exacting. This they undoubtedly are. But first
of all, with themselves, Marx has often been accused of
being addicted to tedious repetitions in his writing, his
critics being unable to see that Marx merely approached
his subject from all justifiable points of view in order to
make sure that his conclusions were correct. We have
already stated before that he never rested his case on
purely logical deductions. These only served him as a
means of grasping and explaining the facts which must in
each case supply the proof. But in looking to the facts
for his proofs, he was not content merely with the ordinary
facts of " experience " in the sense in which his critics un-
derstand the term. Of course, these had to tally with his
conclusions before he adopted them, buf they merely gave
him the prima facia proof. True to his historical ideas, the
real decisive proof he sought in the facts of history, or,
no
120 THE THEORETICAL SYSTEM OF KARL MARX.
rather, in the " facts of experience " considered in their
historical setting and connection.
So it was with his theory of Value and Surplus-Value.
Considering that the question of value lies at the very
foundation of the capitalistic mode of production and dis-
tribution, he insisted that a theory of value in order to be
accepted as correct, must not only be in accordance with
the facts as they are, but it must furnish a key to the un-
derstanding of capitalistic development, to the understand-
ing of the facts of capitalism in their movement. It must
explain not only the statics of capitalism, but also its dynam-
ics. A theory of surplus-value, in order to be accepted as
correct must show the sources and volume of the profits
of the capitalist class not only as they exist to-day, but
throughout the entire historical epoch dominated by the
capitalistic mode of production and distribution. It must
account for the different variations in these profits, if any
be discovered. It must explain the development of profits.
And it is here that the Marxian theory has to record its
greatest triumph. In philosophy as well as in economics,
it is its historical character that gives the Marxian theory
its peculiar import, that forms its essence. What does the
history of .capitalistic profits sh/ow? If there is anything
that is well established in connection with capitalistic
profits, it is the tendency of the rate of profit on capital to
diminish. With the development of capitalism and the
growth of the mass of capital, the return on capital in the
shape of profits is constantly becoming smaller. While the
gross amount of profits obtained by the capitalist class is
constantly increasing with the growth of the mass of capi-
tal, the amount of the profits in proportion to the whole
capital employed, and therefore, the rate of profit on a given
amount of capital, tends to constantly diminish. This is
known in political economy as the " law of the falling rate
of profit." Whence this law? How account for the falling
rate of profit? No theory of value before or after Marx
could give a satisfactory answer to these questions. As
THE GREAT CONTRADICTION. 121
Marx said of the science of political economy as he found
it: —
" She saw the phenomenon (of the falling rate of profit)
and was . agonized by attempts at conflicting explanations.
It may be said, however, that because of the great impor-
tance of this law for capitalistic production, this law forms
the great mystery about the solving of which the whole
science of political economy revolves ever since the days
of Adam Smith. And that the difference between the dif-
ferent schools of the science since Adam Smith consists in
the different attempts to solve this problem."
There is no such mystery, however, when the Marxian
theory of value sheds its light on the underlying basis of
the capitalistic mode of production, and the laws of its
development are exposed to the light of day. Not only does
the Marxian theory offer a satisfactory explanation, but
such explanation flows naturally and of necessity there-
from. And it is as simple and as clear as daylight.
The capital employed by a capitalist " producer " in his
business is divided into two parts: — One which he spends
for his place, fixtures, machinery, raw goods, etc.; and the
other which he spends in paying wages to his men, in " em-
ploying labor " as it is euphoniously styled. Let us call
the capital of the first category " constant " capital, and
that of the second category " variable " capital. The reason
for these appellations is that according to the Marxian the-
ory, the first kind of capital remains constant, unchanged
by the process of production, whereas the second kind of
capital varies, changes, to be more specific, increases in
that process. As was already shown, only labor creates
value, and the capitalist's profits come from the " sur-
plus " value. When a capitalist receives a profit out of
the process of production, — his capital increases in the
operation, — that variation is due to the capital invested in
paying for labor ; the other part of his capital, the raw ma-
terials and other things can not vary themselves, they are
merely reproduced, they remain a constant quantity. Let
122 THE THEORETICAL SYSTEM OF KARL MARX.
us see how the development of capitalistic production af-
fects the two parts of capital, and what bearing this has
on the rate of profit.
John Brown, Sr., went into the business of manufactur-
ing shoes in the year of Our Lord, 1850. He started out
with a capital of, let us say, $500.00, four hundred of
which he spent in fixing up his plant and buying a stock
of raw material necessary in the business, and the remain-
ing one hundred he used in paying his labor. We will as-
sume, for the sake of simplicity, that he employed ten men,
paying each ten dollars per week, and that the " turn-over "
in his business was such that he cashed in every week the
proceeds of his manufactured product, so that he did not
need to invest for labor any more than one week's wages.
Let us further assume that the state of the productivity
of labor was such that the labor of one of our manufac-
turer's men during one week created a product of the value
of twenty dollars. (In addition, of course, to the value of
the raw materials, etc., consumed in its production.) Un-
der these conditions the value of the product manufactured
by John Brown, weekly, will be two hundred dollars, one
hundred of which will be "necessary" value (the amount
paid in wages), and one hundred, "surplus" value. This
will be his profit (In order to simplify, matters, we as-
sume that he deals with his consumers direct, thus cutting
out the middlemen's share of the profit.) The ratio of the
" necessary " to the " surplus " value, which we will call
the rate of surplus value or the rate of the exploitation of
labor, is that of I to I or 100 per cent. John Brown does
not figure that way, however. While he is interested in
paying his men as little as possible and make them produce
as much as possible, whether by foul means or fair, he is
not at all interested to know what proportion the surplus-
value they create bears to their wages. Good business
man that he is, he wants to know what return the capital
invested by him in the enterprise has brought him. He
finds that his investment of five hundred dollars has netted
' THE GREAT CONTRADICTION. 123
him a profit (consisting of the surplus-value), of one hun-
dred dollars, or 20 per cent, per week.
On such profits John Brown's business thrived, and he
accumulated a fortune. He is now resting in peace with
his forefathers, and his son and heir, John Brown, Jr., now
conducts the business. John Brown, Jr., upholds the tra-
ditions of the old house for making profits. But entirely
new methods and processes of manufacturing shoes are
nqw being used by him, as well as by everybody else who
is in the market to compete with him. New machinery
has been invented since the days when his sire started the
business. This machinery is "labor-saving" to a high de-
gree. That is to say/ it increases the productivity of labor,
so that one man can do by its aid the work of several men
working without its aid. This machinery, however, is very
costly; and its employment requires a large outlay for raw
materials, since a man employs more raw materials in the
same proportion as the productivity x>f labor increases.
The "composition" of his capital, — that is to say, the pro-
portionate shares thereof used as " constant " and " varia-
ble " capital, respectively, — is, therefore, different from the
composition of his father's capital, when the old man started
in business. John Brown, Jr., employs a capital of twenty
thousand dollars. Of this fully nineteen thousand are used
as constant capital, and only one thousand to pay for the
labor employed by him. This composition of capital, be-
cause it signifies a higher stage of the development of capi-
talism, we will call the higher composition, and the com-
position of the capital at the time the business was started
we will call the lower composition. Now let us see what
effect did the change in the composition of the capital have
on the profits of the business.
Let us assume that the firm still retains the old scale of
wages. Let us also assume that owing to the introduction
of the improved machinery (and allowing for the cheapen-
ing of the product in consequence), the value of the product
of a man's labor has increased two-fold. What will be the
124 THE THEORETICAL SYSTEM OF KARL MARX.
result? His variable capital amounting to one thousand
dollars, John Brown now employs one hundred men. The
value of the weekly product of each man is forty dollars,
and the value of the aggregate weekly product, four thou-
sand dollars. Out of this, one thousand dollars represents
the necessary value and three thousand is surplus value.
His profits have increased enormously, but yet not in pro-
portion to his capital. That is to say, while the gross
amount of his profits is enormous, the rate of his profits,
the percentage return of each dollar of capital, is consid-
erably smaller. A profit of three thousand dollars on a
capital of twenty thousand makes only fifteen per cent., a
decrease of five per cent, as compared with the older days.
The different ways in which the business of the older and
the younger John Brown is organized, and the results flow-
ing from the different organizations of the business, are
typical of the development of capitalistic production in
general, and correotly exemplify it. It shows the fact
of the falling rate of profit, and also gives the explanation
therefor. The development of capitalist production con-
sisting in the increased productivity of labor, by reason of
which the composition of capital becomes higher, this de-
velopment must necessarily tend to lower the rate of inter-
est or profit; for the profit is obtained only from the vari-
able part of capital, which is constantly being diminished as
compared with the constant part, whereas it is figured on
the whole capital.
Our example, does not, however, show the full effect of
the change of the composition of capital on the profit rate.
When left to itself, the change in the composition of capital
has a tendency to lower the rate of profit much more than
appears from our example. The reason for it is, that in
our example we did not present the workings of this law
in its purity, by changing the conditions of the problem.
In the first instance we represented the workingmen as re-
ceiving one-half of the value they produced, whereas in the
second we assumed that they received only one-quarter.
THE GREAT CONTRADICTION. 125
Had we left the conditions of the problem the same in the
second instance as in the first, that is, one-half the labor
was necessary and one-half surplus, we would have had in
the second instance with even a somewhat lower composi-
tion of capital than that assumed by us, say of eighteen
thousand constant and two thousand variable, — a rate of
interest of only ten per cent, instead of fifteen per cent.
This would show the tendency in its purity. But it would
not show the actual facts of capitalistic development. Our
example does that — in outline, of course. For, with the
higher composition of capital, and the greater productivity
of labor which it represents, grows the surplus j>art of the
value produced, grows the rate of exploitation of labor.
And this quite irrespective of the fact whether the work-
ingmen are receiving poorer pay or not, or whether they
standard of living is becoming lower or not. They may
even receive in real wages, that is, in products, more than
they received before, and still the rate of exploitation will
grow. For with the productivity of labor commodities become
cheaper, so that for the same amount of money received
by them as wages the workingmen may buy a larger
amount of the products produced by them, and yet this
amount will necessarily become constantly smaller in pro-
portion to the amount retained by the capitalist as surplus-
product. In our example we have allowed for the cheap-
ening effect of the productivity of labor on commodities,
otherwise the increase in the value of the product would
have to be more than twice with such a high composition
of capital. The products consumed by them being cheaper,
the workingmen of John Brown, Jr., will get more prod-
ucts for their ten dollars per week than did their fore-
fathers who worked for John Brown, Sr., and yet their
share of the product produced will be one-half of that of
their forefathers, and the rate of explokation of labor will
have increased threefold since the times of John Brown,
Sr. This is what actually happens in the course of the
development of capitalist production.
126 THE THEORETICAL SYSTEM OF KARL MARX.
f\j The greater productivity of labor resulting from tne in-
troduction of improved machinery gives the capitalists the
possibility of increasing the rate of exploitation of labor,
and they are never too slow to grasp the opportunity. This
increases the mass of surplus-value, and consequently also
the rate of profit. We, therefore, have two cross tenden-
cies:— first, the tendency to lower the rate of profit by
raising the composition of capital, thus diminishing, pro-
portionately, the amount of variable capital which alone
produces surplus-value; and second, to increase the rate of
profit by increasing the rate of exploitation and thereby
increasing that part of the product produced by the variable
capital employed which goes to the capitalist as his surplus
or profit. As the variable part of capital diminishes in
proportion, the rate of exploitation grows. Of these two
tendencies, however, the first is necessarily stronger, and
the second can not overcome it for. the simple reason that
a part can not be greater than, nor even as great as, the
whole. No matter to what proportions the rate of exploi-
tation should grow, it can never absorb the whole product.
In order that there should be a surplus-product or value,
there must necessarily be a necessary product or value.
Any diminution, therefore, of the proportionate part of the
capital employed by the capitalists as variable, must neces-
sarily lead to some diminution of the rate profit, be it ever
so small. Hence, the resultant tendency of a falling rate of
profit. The actual extent of the fall will depend on the
co-operation of a number of factors, no mean part being
played by the success which the capitalists will niei-t
in their efforts to raise the rate of exploitation of labor in
order to counterbalance the effects of the change in the
composition of their capital.
This question of the rate of profits brings us to the so-
called Great Contradiction in the Marxian theory, and to the
question of the relation between the first and the third
volumes of Capital. Before, however, entering upon the
discussion of this question, the present writer desires to
THE GREAT CONTRADICTION. 127
state that he intends in a later work to put before the
public some matters which will, in his opinion, put the
whole subject in a new light. Those matters are, however,
not specifically treated by Marx, and as the present work
is merely intended to present the Marxian theory as stated
by Marx, and the criticism of the theory as so stated, no
reference will be made to them here, except to say that
their net result does not in any way change the Marxian
theory as here outlined, but amplifies it.
The Contradiction was first formulated and placed before
the public in a somewhat sensational manner by Frederick
Engels himself. In his preface to the second volume of
Capital, published in 1884, after the death of Karl Marx, .
Engels challenged those Marxian critics of that day who
had declared that Marx said nothing that was new, and
that all the wisdom . contained in Capital had already been
promulgated before by Rodbertus (from whom Marx was
supposed by them to have borrowed his theory of value), to
explain " how an equal average rate of profit can and must
be formed, not only without injury to the law of value, but
really by reason thereof." He argued that if Marx said
nothing new and his theory of value is no different than
that of Rodbertus, these critics ought to be able to do that
by the aid of Robertus' writings as supplemented by
Marx's. This had the effect of setting a host of men to
solving the problem. Most of those who attempted to ac-
complish the task were, however, not the Marx-critics to
whom the challenge was directed, but disciples of Marx
who went about the business not on the basis of Rodbertus'
writings, which had very little to offer towards the solu-
tion of the problem, but on the basis of the laws of value as
laid down by Marx in the first volume of Capital. It was
the ambition of these writers to forestall the solution which
Engels promised would be given by Marx himself in the
third volume. In his preface to the third volume, pub-
lished by him in 1894, Engels reviews the various efforts
at solving this problem, and comes to the conclusion that
128 THE THEORETICAL SYSTEM OF KARL MARX.
none of those who attempted it gave the correct solution,
although some of them came pretty near it, notably Dr.
Conrad Schmidt in his work on the subject which appeared
in 1889. The correct solution, Engels says, is contained
only in the third volume of Capital itself.
The solution of this problem, as given by Marx himself,
in the third volume of Capital, and which is supposed to
explain the great contradiction, is as follows: —
Assuming that the rate of exploitation of labor is the
same in all the spheres of production in society, producing
an equal rate of surplus-value in all these spheres; that the
capitals employed in the different spheres of production
are of different degrees of composition, that is, of different
character as to their division into constant and variable
capital; and that nevertheless the rate of profit is equal in
all the spheres of production, the problem is: — how does
this come about, if the laws of value are as laid down by
Marx. If two capitals, one whose composition is 90 c.
plus 10 v. (90 per cent, constant and 10 per cent, variable),
and one whose composition is 10 c. and 90 v. (10 per cent,
'constant and 90 per cent, variable), the rate of exploita-
tion being the same, produce the same rate of surplus-value
or profit, it is quite evident that the surplus-value, and
therefore, all value, must have some source entirely different
from labor. But that is just what is claimed by all politi-
cal economists. It is assumed to be an established fact
that the rate of profits is equal at any given time in
all spheres of production or circulation of commodities, no
matter what the degree of the composition of the capital
employed in their production. In other words, that at any
given time equal capitals will give equal returns, irrespect-
ive of the particular branch of industry in which they are
employed and of the composition of the capital employed
in that branch. But, says Marx, the supposed fact that
equal amounts of capital bring equal returns, no matter
how employed, gives no indication whatever as to the
source of this profit. This, however, is really where the
THE GREAT CONTRADICTION. 129
contradiction is supposed to lie. It is a contradiction of
the law of value that equal amounts of capital produce the
same amount of surplus-value irrespective of their com-
position. But it is no contradiction of the law of value that
possessors of equal amounts of capital receive equal profits
if it could be shown that the two capitals have produced
different amounts of surplus-value, but that for some rea-
sons, compatible with the law of value, part of the surplus '
produced by the capital of lower composition was trans-
ferred to the owner of the capital with a higher composi-
tion. This, says Marx, is just what actually happens
wherever the law of equal return comes to the surface.
In actual life capitals of different organic composition
produce different rates of surplus-value commensurate with
the amounts of variable capital contained in them. But we
have already seen before that the whole surplus-value pro-
duced by any given capital is not retained by the owner of
that capital as profit on his capital. We have seen that,
by reason of the social nature of capitalistic production and
of the category of exchange-value, this surplus-value is
distributed among a number of other capitalists, who are
concerned in bringing the produced commodity to its social
destination through the circulation process. All the capi-
tals employed in the course of the life-career of the com-
modity share in the surplus-value created in its production,
and their share is proportionate to their size, the rate of
profit for each being arrived at by a division of the sur-
plus-value by the aggregate amount of capital used in the
production and ' circulation of the commodity. This is ac-
complished through the laws of supply and demand by
means of the category which we have called Price of Pro-
duction, and at which commodities are actually sold at
certain stages of their existence instead of at their values.
We have seen already that it is in accordance with the
laws of value as understood by us that commodities are not
always sold at their values; are, in fact, habitually sold at
prices other than their values, by reason of and under cer-
I3<> THE THEORETICAL SYSTEM OF KARL MARX.
tain economic conditions; and that a capitalist may, and
under certain conditions usually does, receive as profits on
his capital surplus-value created by some capital other than
his own. The price of production at which commodities
are sold at a certain stage of their existence is always be-
low their value; and the capitalists engaged in the circula-
tion of commodities exclusively, the merchants, get as
profits on their capitals surplus-value not produced by them
but merely realised by them. The capitalists who produced
this surplus-value are forced to divide up with them by the
very economic conditions which permit them to retain their
own proportionate share.
This principle, which we have heretofore examined with
relation only to one sphere of production, must be extended
to all the spheres of production wherein the law of equal
return prevails. Where the law of equal return prevails in
spheres of production wherein the capital employed is of
different organic compositions, the prices at which the
commodities are finally sold are not their actual values, but
a sort of modified Prices of Production which may be either
above or below their value, and which will be above their
value in the branches of industry with a capital whose or-
ganic composition is above the average, and below their value
in the branches of industry with a capital whose or-
ganic composition is below the average. Just as in the
single commodity the surplus-value produced by one capital
had to be distributed among all the capitals engaged in its
production and circulation, so here the various amounts of
surplus-value produced in the different spheres of produc-
tion must be distributed ratably among the whole social
capital or that part thereof which enters into the equaliza-
tion process, that is, of those branches of industry where
the law of equal return prevails. The whole social capital
is regarded as one, and the whole amount of surplus-value
produced in the different spheres of production is dis-
tributed ratably among the different individual capitals, by
the formation of the price of production, and the goods in
THE GREAT CONTRADICTION. 131
each branch of industry being sold according to that price
of production which will consist of the value of, its cost
of production together with a share of profit out of the
general fund of surplus-value in proportion to the size of
the capital employed in its production and circulation. By
means of this price of production the excess of surplus-
value above the average rate produced in one sphere of
production by reason of the low organic composition of the
capital employed therein, will be transferred to that sphere
of production wherein the amount of surplus-value pro-
duced is below the average, by reason of the high organic
composition of its capital. In those branches of industry
where the organic composition of capital corresponds with
the average or social composition of capital, commodities
will be sold at their values, their prices of production will
coincide with their values ; in those branches whose or-
ganic composition is above the average, the prices of pro-
duction will be above their values in proportion to the com-
position of their capital; and in the branches whose compo-
sition is below the average the prices of production will be
proportionately below their values.
The appearance in 1894 of the third volume of Capital
created a sensation in interested circles. While it does not
stand in any direct relation to the Revisionist move-
ment, it can hardly be denied that it made its formal ar-
gumentation more plausible. The solution of the Great
Contradiction contained in the third volume, and the rest
of the matter therein contained and intimately connected
with this solution, opened the door to no end of dis-
cussion as to the relation between the first and third vol-
umes of Capital. So that the problem to many has turned
into the question how to reconcile the supposedly opposed
doctrines taught in these two volumes of Marx's life work.
The Great Contradiction, in the opinion of many, was not
solved, but extended so as to embrace the whole Marxian
theory. This was confidently asserted by all the opponents
of Marxism, who drew breath. It was heralded from one
132 THE THEORETICAL SYSTEM OF KARL MARX.
end of their camp to the other, and it took its classic form
in Bohm-Bawerk's, " Karl Marx and the Close of his Sys-
tem." The opponents of Marx were not, however, alone
in this opinion. The discussion which has continued until
the present day has shown that a good many Marxists, of
different shades of orthodoxy, shared in this view. So
much so, that a Russian Marxist of some prominence and
of strict orthodox profession of faith, being unable to
reconcile the doctrines laid down in the two volumes, re-
spectively, denied, in his desperation, the genuineness of
the " unfortunate " third volume ! He claimed that be-
cause the third volume was published long after his death,
and was compiled from unfinished manuscripts and ran-
dom notes, Marx appears therein as saying things which
he really never intended to say and which are in crass
contradiction to his real views, which are contained only in
the first volume. Engels' preface to the third volume is
sufficient to show the absurdity of this last assertion. So
that there was the great contradiction, which made plausi-
ble the assertion that Marx completely abandoned his own
theory of value, laid down by him in the first volume, and
returned to the theory of the cost of production, of the
economists dubbed by him " vulgar." The half-and-half
Marxists, a la Bernstein, would not go so far (timidity
and eclecticism being their specialty), and they tried to
minimize the discrepancies between the first and third vol-
umes, claiming that Marx did not abandon his theory of
value as laid down in the first volume, but merely modified
it, on second thought, in the natural course of the evolu-
tion of his theory. Modification by evolution, or evolution
in modification became their favorite theme.
In discussing Marx's philosophico-historic views we al-
ready had occasion to refer to this favorite theme of Re-
visionism. The burden of the song is that Marx's the-
oretical ideas had passed through an evolutionary process,
the main tendency of which was from " unscientific," hard
and fast monistic dogmas, at the outset, to mild and loose
THE GREAT CONTRADICTION. 133
eclectic " science " at the conclusion. This they applied
equally, and with equal justification, to the whole Marxian
theoretical system, to his historico-philosophic and his eco-
nomic theories alike, although they failed to grasp the inner
relation between these theories. Their lack of discrimina-
tion proved to be their undoing. If they had stuck to
Marx's historico-philosophic views alone, they might per-
haps have been able to hold their ground, as Marx's, views
on the subject are not contained in any treatise, are strewn
over the whole mass of his writings in a more or less frag-
mentary condition, and it requires an intimate acquaintance
with his theories to see the improbability of this claim.
Not so with his economic theories. He went into elaborate
discussions of all phases of the subject, and the dates of the
different manuscripts, with a few unimportant exceptions,
are well known. And these testify loudly to the whole
world to the absurdity of these assertions. It appears that
most of the third volume, and particularly those portions of
it which are supposed to modify the first volume, were
actually written down by Marx in its present form before
the publication of the first volume! To speak in the face
of that of a modification, by Marx, in the third volume of
the doctrines laid down by him in the first is too palpable
an incongruity to merit any particular attention. So, and
even more so, would be the claim of an intentional aban-
donment in the third volume of the theory of .value of the
first volume in favor of some other theory. We could then
well afford to let the matter rest where it is. It is not so,
however, with the question of a contradiction between the
two volumes. If there really is such a contradiction, and
if the doctrine of the third volume is a virtual abandon-
ment of the labor theory of value, it makes, of course, very
little difference when the different portions^ of Marx's book
were written, or what he thought of one portion when
writing the other, except, of course, as an interesting study
of a great aberration of an extraordinary mind.
Professor Werner Sombart, the noted German economist,
134 THE THEORETICAL SYSTEM OF KARL MARX.
best known to English readers tthrough his graceful study
" Socialism in the iQth Century," opened the discussion on
the subject soon after the appearance of the third volume
in an essay entitled, " Some Criticism of the Economic
System of Karl Marx."1 In the introductory remarks of
that essay Professor Sombart observes that Marx was a
" most misunderstood author," and that an intelligent state-
ment qf his assertions was the highest duty of a reviewer
of his work. Such a statement he undertakes to give, and
goes about it very conscientiously. It must be stated, how-
ever, that notwithstanding his conscientious efforts and
considerable acumen the execution fell short of the design.
His conclusion, therefore, that there was no contradiction
between the first and third volume can not be accepted as
final.
According to Sombart, the theory laid down in the third
volume of Capital is not much different from the traditional
theory of the cost of production. This does not conflict,
however, with the theory of value expounded in the first
volume, for the simple reason that the labor theory of value
was never intended by Marx to represent the actual facts,
or, as he puts it, "the (Marxian) value does not rcrcal
itself in the exchange relation of the capitalistically-pro-
duced commodities." Nor does it play any part in the dis-
tribution of the yearly product of society. It has no place
in real life. Its office is merely that of an aid to our think-
ing, by means of which we can understand the economic
phenomena, and its place is in the mental operations of the
economic theorist. In short, " it is not an empirical but a
mental fact." Value, thus banished from economic life
into the realms of pure thought, can no longer come into
conflict with the gross facts of this life. Its existence is
none the less real, at least to the mind of the German
scholar who must have been educated on the writings of
the great German idealist philosophers.
Aside from the questionable value of such " value," the
IArcbiv fur Soziale Gesetzgebung und Statistik, Vol. VII, No. 4.
THE GREAT CONTRADICTION. 135
chief trouble with Sombart's conception of the Marxian
"value" is, — that it is not Marxian. Marx never dreamt
of banishing his " value " from real life, from the facts of
actual, every-day, economic life. He not only insisted that
his theory of value had an application to the actual
economic life of capitalist society, but claimed that the
laws of value as laid down by him controlled that life and
prescribed the course of its development. He claimed that
while Production Prices, and prices in general differed
from the values of commodities, they were always gov-
erned by the laws of value and were dictated, normally,
and in the last instance, by these laws. That all declina-
tion of these prices from the actual values, except acci-
dental and temporary, are governed by the very laws of
value which are supposed to be infringed thereby. Truly,
Marx was " a most misunderstood author."
We, therefore, agree for once, with Bohm-Bawerk, that,
whatever the merits of Sombart's conception of value, it
does not in any way remove the contradiction in the Marx-
ian theory of value as Marx stated it. Assuming, of
course, that there is such a contradiction, if Marx intended
his theory to represent the actual course of events of capi-
talistic production and distribution. That there is such a
contradiction is assumed, as we have seen, even by some
orthodox Marxists, and Marx-critics do not tire of pro-
claiming the fact. 'Says Bohm-Bawerk:
" In what relation does this doctrine of the third volume
stand to the celebrated law of value of the first volume?
Does it contain the solution of the seeming contradiction
looked for with so much anxiety ? Does it prove ' how
not only without contradicting the law of value, but even
by virtue of it, an equal average rate of profit can and must
be created ? ' Does it not rather contain the exact oppo-
site of such a proof, viz., the statement of an actual, ir-
reconcilable contradiction, and does it not prove that the
equal average rate of profit can only manifest itself if, and
because, the alleged law of value does not hold good?
136 THE THEORETICAL SYSTEM OF KARL MARX.
" I see here no explanation and reconciliation of a con-
tradiction, but the contradiction itself. Marx's third vol-
ume contradicts the first. The theory of the average rate
of profit and of the price of production cannot be recon-
ciled with the theory of value. This is the impression
which must, I believe, be received by every logical thinker.
And it seems to have been very generally accepted. Loria,
in his lively and picturesque style, states that he feels him-
self forced to the ' harsh but just judgment ' that Marx,
' instead of a solution has presented a mystification.' He
sees in the publication of the third volume ' the Russian
campaign ' of the .Marxian system, its ' complete theoretic
bankruptcy,' a ' scientific suicide,' ' the most explicit sur-
render of his own teaching,' and the ' full and complete
adherence to the most orthodox doctrine of the hated
economists.' "
Bohm-Bawerk then quotes with approval the following
passage from Sombart: "Most of them (the readers of
the third volume) will not be inclined to regard ' the so-
lution ' of ' the puzzle of the average rate of profit ' as a
' solution ; ' they will think that the knot has been cut,
and by no means untied. For, when suddenly out of the
depths emerges a ' quite ordinary ' theory of cost of pro-
duction, it means that the celebrated doctrine of value has
come to grief. For, if I have in the end to explain the
profits by the cost of production, wherefore the whole cum-
brous apparatus of the theories of value and surplus-
value?"
Slonimski says: "Contrary to all expectations the the-
ory of surplus-value is repeatedly asserted (in the third vol-
ume) ; in reality, however, it is denied by its author and
replaced by the old theory with all the familiar elaborations
on the cost of production as the only regulators of value.
The equality of profits is derived from the phantastic as-
sumption that the capitalists amicably divide among them-
selves the incomes of the different undertakings, by equal-
izing the sums of surplus-value which they separately drew
THE GREAT CONTRADICTION. 137
from wage-labor, and that this is accomplished either by
way of brotherly arrangement or through competition. As
to the special surplus-value for which the rival capitalists
fight so mercilessly, why that is lost sight of and plays no
part either in the income of the individual capitalist, or in
the establishment of the rate of profits or in the formation
of prices.
" After Marx has led us in the course of two volumes
through an elaborate analysis by which he sought to prove
that surplus-value is produced by hired human labor-power,
he turns a somersault and admits that all his laws and
formulas are in direct conflict with reality, and cannot be
brought into harmony. That surplus-value in the form of
profits is yielded by every productive capital as such in
equal amount, even though it be used in such a manner
that no wage-laborers are employed thereby. Instead,
therefore, of surplus-ralue, which we put to the credit of
unpaid labor appropriated by the capitalists, we are con-*
fronted with the average rate of profits, which is condi-
tioned neither upon the number of workmen nor upon the
degree of their exploitation, nor is it influenced by either."
And Masaryk declares: " De facto we have in the third
volume the ordinary theory of cost of production, and the
law of supply and demand plays the decisive part."
" Bernstein " — says he — " admits the breach between the
third and first volumes. Marx has certainly modified his
theory. The theory of value of the first volume is incom-
plete, and therefore vulnerable, without the elaborations of
the third volume. Bernstein admits that the first volume
offers for the real economic relations a ' sea of generalities
without any shore/ and that the determination of value by
the quantity of labor is inadequate; a more specific measure
is necessary. Commodities are exchanged not at their
value but at their cost of production, the exchange-value
of goods is directly -determined by competition of capital,
and only indirectly by the law of value. I believe that
Bernstein correctly judges the Marxian teaching. The
Ij THE THEORETICAL SYSTEM OF KARL MARX.
third volume speaks only too plainly against the first." And
he adds:
"These expressions (of the third volume) show the.gin-
eral change in Marx's views. We have seen how Marx
modified in the third volume his older definition of historic
materialism — the whole third volume makes also by its
tone a different impression than the first. The first volume
is not so ripe Bernstein attempts another explanation
of the contradiction between the older and the newer doc-
trines, which contradiction, as we have seen, he unquali-
fiedly admits."
Yes, " we have seen." We have seen how absurd it is
to speak of a modification of the older unripe doctrine by
the newer and riper doctrine, when the supposed older doc-
trine was formulated after the supposedly new one....
And this, as Masaryk himself says, applies to all of Marx's
views, whether historico-philosophic or economic. Yet, its
evident absurdity will not deter Marx-critics, particularly
of the milder and revisionist sort, from continually repeat-
ing this statement.
This, however, by the way. What does interest us just
now is the relation of the third to the first volume, incident
to Marx's solution of the " Great Contradiction." Singu-
larly enough, most of the Marx-critics are content with
merely stating ex cathedra their conclusions or assertions
that Marx has, in the third volume, " modified " or " aban-
doned " the theory stated by him in the first volume, that
he contradicts it, that he has adopted a new theory, without
giving themselves any particular pains to show the reader
just how they arrived at these conclusions, or what is the
basis of their assertions, except in the most general way.
Always excepting the methodical Bohm-Bawerk, who, be-
sides his general remarks, has also particular objections,
separately stated and numbered. We shall pay our respects
to them in due time, if there is anything left of them after
our general discussion.
Before entering, however, upon the discussion of the
THE GREAT CONTRADICTION. 139
theoretical questions involved, we must call attention to
the circumstance that the facts themselves are not in dis-
pute here, but only their interpretation. Notwithstanding
the apparently unanimous verdict of the critics that the
Marxian theory is on this point " in direct conflict with
reality " and " opposed to the facts," there is really no
question here of facts, but merely of their interpretation.
The phenomenon itself which, as Marx asserts, brings the
Marxian law of value in harmony with the law of equal
rate of profit, that is to say: the alleged fact that the
products of. labor in spheres of production with a higher
organic composition of capital are sold at higher prices
than the products of labor in spheres with a lower com-
position of capital, this fact itself, we say, is not disputed
by the Marx-critics. It is only as to the explanation of
this fact that they differ from Marx. Marx's explanation
is based, in the main, on the fact, undisputed by his critics,
that the same amount of labor results in a product which
will be sold for a higher or lower price according to the
higher or lower organic composition of capital in the sphere
in which it was employed. The difference between Marx
and his opponents is as to the reason for this alleged fact.
Marx says the reason is that in the spheres with a higher
composition of capital commodities are sold above their
value and in spheres with a lower composition of capital
below their value ; and that the additional value included
in the higher price of commodities produced in the first
sphere is created in the other sphere and is transferred to
their possessor f by the very sale of commodities produced
in the second sphere below their value. With this reason-
ing his critics disagree, as they undoubtedly have a right
to. But they have no right whatever to hide the circum-
stance that it is their reasoning that is opposed to Marx
and not the facts. It is a question of logic and not of fact.
Now, as to the logic of the matter. That there must
have been some very poor logic used by somebody can easily
be seen from the fact that all Marx-critics who agree that
I4O THE THEORETICAL SYSTEM OF KARL MARX.
Marx in his " riper " judgment abandoned his theory of
value, also agree that even the Marx of the riper judgment
never knew that he was propounding in the third volume
an old and commonplace theory and was abandoning his
own theory, on the exposition of which he wasted the entire
first and second volumes of his life work.
In what does this abandonment consist according to the
Marx-critics? Stripped of their verbiage the statements
of these critics amount to this : In the first volume Marx said
(1) that the value of a commodity depends on the amount
of labor necessary for its (re) production, and that such
value was the point about which its price will oscillate ;
(2) that the profits of the capitalist, therefore, come from
the amount -of surplus-value created by his workingmcn ;
and (3) that the cost of production has nothing to do \\ith
the value or price of a commodity or the profits of the
capitalists. In the third volume, on the other hand, he
admits that (i) the price of a commodity may be, and
usually is, permanently fixed at, or oscillates about, a
point which is different from its value as measured by the
amount of labor necessary for its ( re) production ; (2)
that the amount of profits which a capitalist obtains from
his capital does not depend upon the amount of surplus-
value produced by his own workingmen; and (3) that the
old theory of cost of production as to value, price and
profit holds good.
We will discuss the last proposition first, for the reason
that it may throw some light on the whole subject.
Marx says nowhere in the third volume that the cost of
production of a commodity determines either its value or
its price, except to say that the old values which go into
its production in the shape of raw material, etc., are re-
produced in it and form part of its value and consequently
of its price, a proposition which nobody will claim is an
innovation of the third volume. Wherein does the " quite
ordinary " theory of cost of production of the third volume
then consist? Evidently in the theory of the Price of Pro-
THE GREAT CONTRADICTION. 141
duction developed in the third volume. But has the price
of production anything to do with the cost of production?
Have not the learned critics been misled by the similarity
of terms ? Let us see. What is the " ordinary " theory of
cost of production? That the value of a commodity is
equal to the cost of its production, plus the average rate of
profit on the capital invested in its production. Marx's
Price of Production consists of the costs of production
(that is, of the value of the different ingredients which go
into the production) plus the average rate of profit on the
capital invested in the production process. The two things
look so much alike to the uninitiated that one is not sur-
prised to hear Sombart complain that if that is what we
were to come to in the end, wherefore the " cumbrous
apparatus " of value and surplus-value ?
Let us examine the matter a little closer, however. A
close examination will show, in the first place, that the
Marxian cost of production which forms a part of the
Price of Production, is determined by its value according
to the labor theory of value, whereas the " ordinary " theory
of cost of production has no such determining element.
As a result, the " ordinary " cost of production theory re-
volves in a vicious circle: The value of a commodity is
determined by the cost of its production, the cost of its
production is determined by the value of the commodities
which go into its production, the value of these commodi-
ties is determined by the cost of their production, and so
on, and so forth, ad infinitum. In other words, the " ordi-
nary theory of cost of production can no more explain
either the value or the price of commodities than a man
can pull himself out of the mire by his own bootstraps.
This is not, however, the principal point. The " cum-
brous apparatus " of the Marxian ..theory of value and sur-
plus-value was necessary in order to attain the principal ob-
ject of the science of political economy, the discovery of the
laws governing the production and distribution of profits
in the capitalist system. We have already dwelt on this
142 THE THEORETICAL SYSTEM OF KARL MARX.
point at length in a preceding chapter. And this " cum-
brous apparatus " is still necessary, and is still the only
means of attaining this object of political economy, all the
.Marx-critics to the contrary notwithstanding. Neither the
ordinary nor any extra-ordinary theory of cost of pro-
duction even as much as attempts to solve this problem,
which is the problem of political economy. The theory of
cost of production, which even the " Marxist " Sombart
places on a level with the Marxian theory, tells us gravely
that the value of a commodity is equal to the cost of its
production plus " the average rate of profit." But what is
this " average rate of profit " ? By what is it determined ?
Where do profits, whether average or non-average, come
from?
In vain will the inquirer look to the theory of cost of
production for an answer. But these questions are all an-
swered by the Marxian theory, which our astute critics evi-
dently did not begin to understand. The first volume shows
the genesis and general laws of profits; the second volume
shows the distribution of profits between the different cap-
italists, instrumental in the production and distribution of
commodities, and the influence of the circulation process
on profits; and the third volume shows the reciprocal in-
fluences of the different spheres of production and distribu-
tion of commodities in the whole capitalist system, and the
mode of distribution of all the profits netted to the capital-
ist class among its different members, the formation of the
average rate of profit.
By reason of the formation of an average rate of profits,
the profit of the individual capitalist does not depend on
the amount of surplus-value produced by his own working-
men. This, as we have seen, is the second point on which
the third volume is supposed to conflict with the earlier
volumes. This objection rests on the grossest misunder-
standing of the first and second volumes. Marx never said,
and could never have said, that every individual capitalist's
profits consist of the surplus-value created by his own
THE GREAT CONTRADICTION. 143
workingmen, or that every capitalist pockets all the sur-
plus-value produced by his workingmen. Such a statement
would be absolutely repugnant to the spirit of the Marxian
doctrine as laid down in the first volume. The cardinal
difference between the Marxian theory of profits and the
theories which preceded it, is that according to Marx all
profits of the capitalist class are derived from the process
of production. It is with the exhaustive elaboration of this
doctrine that the first volume is chiefly .concerned, and this
is supplemented in the second volume by showing the nega-
tive implied thereby, — that no profits are created in the
circulation process. But Marx certainly knew that profits
are made by the capitalists engaged in the circulation pro-
cess. It was this very knowledge that impelled him to
write so exhaustively in order to prove that while these
capitalists derive their profits from the circulation process,
they merely realize during this process, and by means there-
of, the profits which are created in the form of surplus-
values during the process of production.
Of course, this could only happen if some of the capital-
ists receive profits not created in the form of surplus-value
by their own workingmen; nay, notwithstanding the fact
that their workingmen created no surplus-value whatever,
or that they employed no workingmen at all. This, again,
could only happen if the capitalists engaged in the produc-
tion process did not retain all the surplus-value created by
their workingmen, but divided them with the capitalists en-
gaged in the circulation process. It is with the explanation
of these facts that the first and second volumes are filled.
Yet, some Marx-critics evidently missed even this !
This disposes of the proposition placed first by us because
of the prominence given to it by Marx-critics. How could
all the surplus-value be produced in the production process
of commodities and yet part of it realized^ in the circulation
process, if goods are actually sold at their values? If the
value of commodities is the point about which their prices
oscillate at all stages of their existence, all the surplus-
144 THE THEORETICAL SYSTEM OF KARL MARX.
value contained in them must evidently be realized as soon
as they are sold by the producer, and unless some new value
attaches to them in the circulation process, the capitalist
engaged in that process cannot possibly make any profit.
Here was a contradiction greater than any that could result
from the supposed law of a common rate of profits, assum-
ing that Marx ever did say that the price of commodities
will always oscillate about their value. The " solution "
of this " Great Contradiction " is that Marx, as we have
repeatedly pointed out, never did say any such thing, and
the reading of such a thing into Marx is simply preposter-
ous. A careful reading of the first and second volumes
of Capital clearly shows that the price of commodities is
governed by their value, but that it need not conform to it,
nor even always oscillate about it. Quite to the contrary.
Under given conditions, which are necessary at certain
stages of the existence of every commodity, its price will
remain constantly away from its value. Always, however,
subject to the general laws of value, and by reason of the
laws of value. The price formed under these conditions is
the Price of Production.
It is generally assumed that the category of the Price of
Production is an innovation introduced by Marx in the
third volume in an effort to solve the contradiction between
the law of value and the law of equal return. This is a
mistake. While the term " Price of Production " is first
used in the third volume (because there only are all the
conditions under which it forms discussed for the first
time) the principle itself is contained in the earlier vol-
umes, and has absolutely nothing sto do with the particular
problem presented by the question of the equal rate of
profits. When Marx came to treat of that problem h<- sim
ply applied to it a principle which already was part of his
system as expounded by him in the first and second vol-
umes. The only difference between the category of Price
and Production as implied in the first and second volumes
and as expressed in the third volume is this: The condi-
THE GREAT CONTRADICTION. 145
tions for the formation of this price discussed in the first
two volumes were such as made it always below the value
of commodities, whereas the conditions for its formation
discussed in the third volume make it possible for the price
of production to be either below or above the value of the
commodity. But whether above or below value, whether
formed by reason of the average rate of profit or under the
conditions described in the first and second volumes, or
both, the price of production is governed by the value of
the commodity, and exists by reason thereof and in con-
formity to its laws. In other words, notwithstanding the
fact that prices may, in the capitalist system of production
and distribution, be permanently at, or oscillate about, a
point different from the value of commodities, the forma-
tion of these prices, and. consequently, their movement, is
governed by the laws of value.
This ought to be plain to all Marx students. But the
trouble with Marx-critics, in the economic branch of his
theory, as with those who treat of his historico-philosophic
ideas, is, that they cannot distinguish between the individ-
ual and social element and cannot see things in their mo-
tion. Because the profit of an individual capitalist does
not depend merely on the amount of surplus-value produced
by his workingmen, they conclude that the theory of sur-
plus-value does not explain the profits which the capitalists
get under the capitalist system. And because the price
of some commodities may be more or less permanently
above or below their value, they assert that the law of value
governing the formation and movement of prices in the
capitalist system is incorrect. They cannot see that before
the capitalist could get his profits at any given general rate,
that rate must have been established in society according
to some law; and that before the price could be at a certain
point, it had to be put there by some social law of value.
And they cannot therefore see how the individual and
statical cases, while apparently deviating from the general
laws in their movement, are actually governed by them.
146 THE THEORETICAL SYSTEM OF KARL MARX.
To borrow an example from another science, and an
" exact " one at that. The critics of the Marxian law ot
value are exactly in the same situation as would be the critic
of the law of gravity/ who would declare that law to be
false for the reason that bodies do not fall in actual ex-
perience in accordance with the rules formulated by it.
Indeed, such a critic would be in a better position than the
Marx-critics. For, while according to the laws of gravity
falling bodies acquire an acceleration of 981 centimeters per
second, and that irrespective of their nature, form or size, the
" facts of experience " prove conclusively that not one body
in a million actually falls at that rate, and any child of
some intelligence will tell you that the nature, the form, and
the size of a falling object, make all the world of differ-
ence in the velocity which it can acquire. Yet, the law
of gravity is correct when properly understood. And the
Marxian law of value is no less correct. But it requires a
greater intelligence than that usually displayed by intelli-
gent children, observers of " facts of experience," ana
some Marx-critics, to understand it properly. Therein lies
the whole trouble.
CHAPTER VII.
ECONOMIC CONTRADICTIONS AND THE PASSING OF CAPITALISM.
In the preceding chapters we have endeavored to show
the purpose of Marx's inquiry into the laws of exchange-
value, and how those laws furnish the key to the under-
standing of the workings of the capitalist system of pro-
duction and distribution.
We have examined the capitalist system as it is, without
going into the question of its origin, except to note the fact
that it had an historic origin, that is to say, that it is not
eternal or even immemorial in its existence but is a his-
torical phenomenon having had its origin within the re-
corded memory of men.
We have examined some of the tendencies of its devel-
opment, but only within its confines. We have examined
some of the tendencies in the development and distribution
of the mass of surplus-value produced in the capitalist sys-
tem while it lasts. The question of its lasting, as to its
extent and form, we have not touched upon. We might of
course say, a priori, that since the capitalist system is only
a historic phenomenon it will certainly not last forever.
While this is true, it is of no importance whatsoever, unless
we can say with some degree of certainty that the passing
of this system is of such proximity that its end can be seen,
and this is only possible if its end is so near that we can
discern its form, or rather the form of the system which is
to succeed and supplant it. This again can only be de-
termined, if at all, from an examination of the tendencies
of the capitalist system, and the laws governing it, fol-
lowed out to their ultimate and logical results so as to see
147
148 THE THEORETICAL SYSTEM OF KARL MARX.
whether they lead beyond the capitalist system itself. Ami
if so, whither are we drifting?
Should a careful and exhaustive examination of the
tendencies of the capitalist system fail to lead to any be-
yond, then we must accept the capitalist system as unlim-
ited in duration for all practical purposes. For the social
system which is to succeed the capitalist form of society,
must be born and developed within the bowels of capitalism,
and it will come into existence only after the passing of
capitalism shall come about as the necessary and logical
result of the full development of the laws of its own being.
And it will be long before the end of the old system, and
the birth of the new one will come, that the signs of de-
caying old age and of the new germs of life will manifest
themselves to the intelligent observer.
The examination which Marx made of the capitalist sys-
tem has not only revealed to him the laws which govern
the production and distribution of wealth within the system,
but also the historical tendencies of its development which
show its place in history with reference to its origin as well
as its passing. His work, " Capital," is therefore not only
an explanation of the workings of the capitalist system,
but also an ^historical estimate, an appreciation thereof.
i The sub-title of the work, " A Critique of Political Econ-
omy," refers not so much to the theories of the political
economists who preceded him with reference to the ex-
planation of the actual workings of the capitalist system, as
to their failure to appreciate the tendencies and the laws
of capitalism which will lead to its ultimate passing away.
/ According to Marx, the capitalist system of production
and distribution is so full of inherent contradictions, that
its own development, if the laws of its own existence are
) permitted to freely assert themselves, will lead to its ulti-
/ mate and speedy destruction. For, not only are the laws
of capitalism inherently contradictory, but the development
of capitalism has already reached that stage where the
contradictions upon which it rests make themselves felt to
ECONOMIC CONTRADICTIONS. 149
its own detriment, and the forces and elements which are
to work its destruction and supplant it are maturing rapidly
before our very eyes. So does the system which is to take
I the place of capitalism take definite sfyape and outline, so
that its general form and appearance stand clearly before
our vision inscribed: Socialism.
Before proceeding, however, any further with this ex-
amination, our attention is called to a question which might
interfere with the progress of our inquiry unless answered
right here. There is perhaps no question which leads to
as much discussion, and as contradictory opinions, since
the advent of Revisionism, as the question of the relation
between the theory of value and socialism in the Marxian
theoretical system. The cleavage of opinion is in the main
along the lines of orthodox and revisionist Marxism, the
former claiming an intimate relation and interdependence
between these parts of the Marxian theory, and the latter
denying it. This alignment on the present question is not
very strict, however; and absolutely irreconcilable opinions
on this subject are held by Marx-critics belonging to the
same camp. A glance into the discussion of this subject
will again reveal the almost hopeless state of ignorance of
the Marxian theory which prevails even among the ablest
of Marx-critics.
According to Tugan-Baranowsky * (who agrees in this
respect with most orthodox Marxists) Marx based his
socialism entirely on what he thought to be the laws of
capitalistic development resulting from the peculiarities of
the • law of value which forms its keynote. Oppenheimer
and Simkhowitch,2 however, and a host of others, insist
that Marx's theory of value has nothing whatever to do
with his socialism.
* Michael Tugan-Baranowsky, Theoretische Grundlagen des Marxismus.
Leipzig, 1905. Der Zusammenbruch der Kapitalististhen Wirtschaftsord-
nung. In Archiv fur Sozialwissenschaft und Sozialpolitik. Vol. 19.
2 Franz Oppenheimer, Das Grundgesetz der Marxschen Gesellschafts-
lehre. Berlin, 1903. V. G. Simkhowitch, Die Krisis der Sozialdemokratie.
In Jahrbucher fur Nationaloekonomie und Statistik (1899).
I5O THE THEORETICAL SYSTEM OF KARL MARX.
Curiously enough, Tugan-Baranowsky on the one hand
and Oppenheimer and Simkhowitch on the other, all claim
one and the same passage in Engels as authority in support
of their respective positions; which adds no little to the
bewilderment of the simple-minded reader. The treatment
which this particular passage from Engels has received,
and the uses to which it has been put, is very characteristic
of up-to-date Marx-criticism, particularly of the Revisionist
brand: Detached passages, sentences and phrases, from
Marx and Engels are bandied about without the slightest
attention being paid to the particular context or connection
in which they were used, thus often making them yield an
entirely different meaning from that intended by the author.
The result is that everybody proves by Marx and Engels
themselves whatever opinions he pleases to ascribe to them,
a most fruitful field is provided for the adherents of the
theory of evolution in Marxism, and a plentiful harvest is
assured to the gatherer of Marxian contradictions.
V. G. Simkhowitch, who has to his credit one of the
wordiest essays on Marxism, published in one of the most
learned German magazines, says: "Marx's socialist de-
mands and his theory of value are genetically related, but
systematically considered there is no connection whatever
between them. In saying this I merely repeat something
which is self-evident to every philosophically educated per-
son who has grasped the Marxian philosophy (Weltan-
schauung'). Anybody who cares can find specific state-
ments to that effect in Marx and Engels. So says Engels
about the relation of Marx's socialism to his theory of
value: Marx therefore never based his communistic de-
mands thereon, but on the inevitable break-down of the
capitalistic mode of production which we daily see approach-
ing its end. And in the literature of Marxism this has
always been insisted on."
At the risk of being accounted philosophically uneducated
we shall have to disagree with our philosophic Marx-critic,
along with others, for reasons which will presently appear.
ECONOMIC CONTRADICTIONS. I$*
Just now however it is the passage quoted from Engels
that interests us. We must say most emphatically that
Engels never said any such thing as he is made to say by
our philosophically educated critic. Not that the words
quoted are not Engels'. The words were used by Engels,
surely enough. But their meaning is entirely different. For
Engels did not say this, "About the relation of Marx's
socialism to his theory of value" as Simkhowitch (and
Oppenheimer) seem to think, but about; something else,
which exactly reverses the meaning of the passage. In his
preface to Marx's " Misery of Philosophy," Engels says
that long before Marx some socialists attempted to base
their socialism on the Ricardian theory of value, claiming
that since, according to Ricardo, labor is the source of all
value, the laborers are entitled to all the value produced,
which means to the whole social product. And then he
goes on to say:
" The above application of the Ricardian theory, namely,
that to the workingmen, as the only real producers, belongs
the entire social product, their product, leads directly to
communism. This application is, however, as Marx points
out in the passage quoted above, economically formally
false,* for it is simply the application of ethics to economics.
According to the laws of capitalistic economics the greatest
portion of the product does not belong to the workingmen
who produced it. We may say: this is wrong, it must not
be. But that has nothing to do with economics. We
merely say by this, that this economic fact is opposed to our
moral feelings.
" Marx therefore never based his communistic demands
thereon, but on the inevitable break-down of the capitalist
mode of production which we daily see approaching its
end."
Our philosophically educated critic evidently got things
somewhat mixed. Marx never based his communistic de-
mands on the moral application of the Ricardian, or his
own, theory of value. Nor on any morality for that mat-
152 THE THEORETICAL SYSTEM OF KARL MARX.
ter. Therein he differed from the Utopian socialists who
preceded him and from such of those who followed him,
who, like Bernstein for instance, have returned to the
moral application of economic theories. That is why Bern-
stein and the rest of the Revisionists do not see the con-
nection between the Marxian theory of value and his social-
ism. Any theory of value will do for them as long as it
permits, or they think it permits, the moral application
which they are after. And as any theory might be made to
yield such a moral to those who look for it, they have be-
come indifferent to theories of value in general. Not so
with Marx. His socialism is scientific, as distinguished
from Utopian based on moral applications, in that it is the
result of " the inevitable break-down of the capitalistic mode
of production." But this inevitable break-down can only be
understood and explained by the aid of the Marxian theory
of value. That is why his theory of value and his social-
ism are so intimately connected in his system. Marx based
his socialism on his theory of value. But on its economic
results, not on its moral application. And it is due to the
lack of understanding on the part of his critics as to what
Marx conceived to be the economic results of his theory
of value, that the discussion of the relation between his
theory of value and his socialism is still going on, and his
and Engels' writings are still being put to all sorts of uses.
The law of value which lies at the basis of capitalism
contains within itself, according to Marx, a mass of con-
tradictions which lead in the development of capitalist
society to the formation of a series of antagonistic elements
which must ultimately result in its break-down. While
these contradictions and antagonisms are developed by the
same economic process, they are not all of a strictly eco-
nomic nature, and may have results of what is usually con-
sidered a moral character.
While the facts themselves which will lead to the dis-
placement of the capitalist system must be strictly economic
in their nature, that is to say the capitalist mode of pro-
ECONOMIC CONTRADICTIONS. 153
duction and distribution must become a fetter upon pro-
duction before it can be overthrown, the actual power which
will overthrow it, or at least the form which this will assume
in the consciousness of the men who will do this work, may
be of a moral or ethical character. For man possesses the
peculiarity of placing absolute standards on relative mat-
ters, and he calls moral everything that accelerates his prog-
ress on any road which he may be travelling, and im-
moral everything that retards this progress. When he
finds, therefore, that any given arrangement is in his way (
he declares it to be immoral and fights it with all the force
of his " moral nature."
He may, therefore, be depended upon to make a moral
issue of, and lead a crusade against, anything that will stand
in the way of his economic progress. It is to the economic
facts of capitalism that we must therefore look for the
basis of socialism.
In order to appreciate properly these facts, we must go
back a little to the beginning of our examination of the
capitalist system. We have there noted the difference be-
tween the wealth of capitalistic society and that of the forms
of society which preceded it. We have noted that dif- A/ I
ference to be in the fact that capitalistic wealth is an ag-
gregation of commodities. This, as was also already noted,
is due to the circumstance that the purpose of capitalistic
production is different from that of any former mode of
production.
This difference in the purpose of production, production
for the market instead of for use, has wrought a change
in the process of distribution of the social product between
the different social elements which are to share therein.
Under former systems of production this process was a
very simple one, and the persons engaged in it were con-
scious and well aware of what they were doing. It was an
extra-economic process, in a way, the real economic pro-
cess being confined to the process of production. It was
in the capitalist system that the process of distribution first
/ffl
154 THE THEORETICAL SYSTEM OF KARL MARX.
became an unconscious, " natural," and economic process,
by the addition of the circulation-process to the production-
process of commodities, as part of the general economic
process of society, and that part of it in which the distri-
bution of the produced commodities among those entitled
to them is to take place.
From the capitalist standpoint the circulation-process of
commodities is the most important of the economic pro-
cesses. Not, however, because it is only by this process
that the produced commodities reach their social destina-
tion, the consumers, but because it is in this process that
all value, including the surplus-value, the cause and aim of
capitalist production, is realized. Until realized in the cir-
culation process, all value produced for the capitalist,
"necessary" as well as "surplus," is only potential value,
liable to be destroyed at any moment by some change in
the social conditions of its production or distribution. In
order that the capitalist class may obtain its surplus-value,
the whole value must not only be produced but consumed,;
either absolutely or productively. And in order that the!
individual capitalist may obtain his share of the fund of
surplus-value created for his class, the value in the pro-
duction or circulation of which he is economically engaged
must be consumed as far as he is concerned, that is to say,
it must reach his immediate consumer.
This process of the realization of value and of the dis-
tribution of the surplus-value in the circulation-process of
commodities is presided over by the God of capitalism —
Competition — who, as all the world knows, is "the life of
trade." The share of the surplus-value which each in-
dividual capitalist obtains depending on his success in this
competition, the source of all surplus-value has been lost
sight of, and the importance of the circulation process
grossly exaggerated. It has, however, a real and vital
importance to the capitalist class, for it is here that the
surplus-value produced elsewhere is actually realized.
The essentials of capitalism are therefore three. Private
ECONOMIC CONTRADICTIONS. 155
I
Property; a free working class; and Competidn. Private
property in the means of production is, of course, at the
foundation of the capitalist system as it is of all societies
divided into classes. In this it does not differ from other
class-societies which preceded it. Not so with the other
two elements. They were almost unknown to the social
systems which preceded it, but are absolutely essential to
capitalism. We have already seen how important a role
competition plays in the realization and distribution of the
surplus-value among the members of the capitalist class.
It also plays an important part in determining the relative
amount of the surplus in all the values that are produced,
as we shall have occasion to see later.
This however, depends on the third element, the free
working-class. The working-class in order to serve as an
efficient instrument of capitalist production must be ab-
solutely free. " Free," as Marx says, both from personal
bondage and from the ties of property. Were the work-
ingmen to be burdened with property the whole edifice of
capitalism would be impossible, for the commodity labor-
power would then be absent from the market and the
possession of the necessary and surplus-value would then
be united in the same person, which would extinguish all
difference between them. Production of commodities would
also be next to impossible were the workingmen not free
personally so as to be able to sell their labor-power to the
highest bidder. Competition among the producers would
then be impossible. For competition implies equality of
opportunity, whereas under such conditions the opportunity
of production would depend on the possession of working-
men. Besides, production or abstention from production
would then depend not on the choice of the capitalist but
on the number of workingmen he possessed. He could
not produce if he possessed none, and wQuld be compelled
to produce if he possessed them. For it is of the essence
of a slave that he must be fed, and consequently worked.
The presence of these three elements together turns the
156 THE THEORETICAL SYSTEM OF KARL MARX.
means of production into " Capital," and gives the laws
of capitalism free play. Hence, free trade is the typical
policy of capitalism, as is the " free " employment of private
property, personal liberty and right to contract, with all
that it implies. And protection in any form, or the inter-
ference with property and liberty in any manner, is a sign
of either an imperfectly developed capitalism, or of capi-
talism in a stage of decay and tottering to its fall. %
What, then, are the tendencies of the development of
these elements of the capitalistic system? How do they in-
fluence one another in the, course of their development?
And how is the production and realization of surplus-value,
the aim and purpose of capitalistic economic activity,
affected by the sum-total of these influences?
The growth of capitalism, in so far as it is not merely
expansion over an increased area, but development of force
and power, means the rapid accumulation of capital, more
particularly of machinery of production and circulation.
All our great accumulations of wealth consist of this ma-
chinery with the exception of some consisting of land,
which, as we have seen, gets its value from the reflex ac-
tion of this machinery. The accumulation of machinery
does not mean, however, the mere piling up of machinery
upon machinery ; that is to say, it does not mean the mere
addition of machinery of the same kind to that which al-
ready exists. The process of accumulation starts out, of
course, by addition of machinery of the same kind. But it
does not proceed very far in that way. The real spring
of the process consists in the constant invention of ever
newer and costlier machinery. The economic value of this
machinery (that is its value as an economic force) consists
in its labor-saving quality. It is of the essence of every •
new invention that it must be labor-saving in some way, /
otherwise it is useless to capital. This mechanical law of
the accumulation of capital finds its economic expression
in the law of the rising organic composition of capital.
The essence of all new machinery introduced in the pro-
ECONOMIC CONTRADICTIONS. 157
cess of accumulation of capital being its labor-saving qual-
ity, and the purpose of its introduction being the replacing
of costly live-labor by a cheaper mechanical process, the
accumulation of capital is only possible by the constant re-
placement of live-labor by machinery, by the ever-recurring
forcing out of employment of great masses of labor. Thus,
this mechanical law of the accumulation of capital, which,
as we have seen, finds its economic expression in the rising
organic composition of capital and therefore in* the falling
rate of profits, finds its sociological expression in the capi-
talistic law of relative over-population.
That is to say, that under capitalism a country may be- .-
come over-populated with relation to the needs of capital
or of the capitalist class in laborers, and large masses of
its population may thereby lose their means of productive
employment and therefore their means of subsistence, while
the absolute needs as well as means of employment and
subsistence are quite sufficient to provide for all its mem-
bers. The Malthusian law, whatever else may be said of
it, certainly has no application to the question of population
under the capitalist system of society. For aside from the
question whether there are any " natural " laws govern-
ing the growth of population and of the means of sub-
sistence, such laws, if there be any, would be quite super-
fluous and inoperative under capitalism. For the very pro-
cesses by which capital is being accumulated produce an
over-population long before the. natural limit of population
could be reached, and that limit is therefore never reached
under capitalism.
The laborers who are continually being thrown out of/
employment by the introduction of new, labor-saving, ma-
chinery, are thereafter absorbed in whole or in part by thev
process of production, when the new capital, or the old j
capital in its new form, has had sufficient time to expand'
and accumulate on the new basis so as to need new
"hands." This process of absorption continues as long as
the accumulation proceeds on this new (soon to become
558 THE THEORETICAL SYSTEM OF KARL MARX.
old) basis of production, and until it has sufficiently ac-
cumulated to require, and has actually found, a new basis
of production in the further invention of some newer ma-
chinery. When this occurs there is a new " freeing " of a
mass of workingmen from the bondage of employment, and
the process begins all over anew.
This constant hunt for additional surplus-value, here by
expanding the old processes of production by constantly
employing more labor and here by changing the processes
so as to narrow down its base of human labor, in short:
the process of accumulation of capital, requires, not only a
" free " but an elastic working class. It necessitates the
existence of a " reserve " army of workingmen beside the
active one. This it creates and augments by the repeated
displacements of live-labor by machinery, and it makes
use of it for the purposes of expansion when accumulation
glides along smoothly until the next " fitful " explosion.
The greater the accumulation of capital, the greater the
" reserve " army which it needs and creates, as compared
with the " active " army which it maintains. The " re-
serve " army is not identical with the " army of the un-
employed," but the greater the ".reserve" the greater the
potential army of the unemployed.
The workingmen under capitalism being " free " and
equal, there is no actual line of division between the active
and reserve army of laborers. On the contrary they are
in continual flux, men on duty and reservists continually
changing place, and the same men sometimes being half
active and half reserve. The existence of the reserve army
and this relation between the active and reserve armies of
the working class have the most deplorable effect on wages,
and on the condition of the working class generally. Aside
from the destitution caused by the introduction of new ma-
chinery among those workingmen who are thereby thrown
out of employment and those directly dependent on them,
the presence in the market of this superfluous mass of la-
bor-power entering into competition with that part of the
ECONOMIC CONTRADICTIONS. I$9
working class which does find employment reduces the
price of that labor-power which is employed without there-
by gaining any employment for itself. While the value
of labor-power is determined by the amount of labor neces-
sary for its re-production, that is, the amount of necessaries
consumed by the workingmen, this amount is by no means
a fixed quantity. It depends on the standard of life of the
working class as it has developed in the course of its
historical existence in a given country. But this standard,
being a product of historical forces, may be raised or
lowered. The existence of the " reserve " army, the pro-
cess of the accumulation of capital which produced it, tends
to lower this standard and it needs hard fighting to keep
it up, not to speak of raising it. Besides, making, as it
does, the workingman the sport of every turn of the for-
tunes of capitalistic production, absolutely insecure in
whatever livelihood he does get by reason of the fierce
competition of his fellow-workers, and therefore dependent
on the whim and caprice of his capitalist employer, it tends
to degrade his morale, break in him all manifestations of
the spirit of independence, and to make of him a servile tool
of his capitalistic master.
But right here in its influence on its first requisite, a free
working-class, we encounter the contradictory nature of
capitalistic development. The very processes which tend
to reduce the workingman's wages, and to lower and de-
grade him, bring into life those conditions which enable him
to forge the weapons by which he can not only successfully
withstand the hurtful tendencies of capitalistic development,
but which are destined to work the wonders of his salvation
from wage-slavery, — the economic and political organiza-
tion of the working class. The introduction of those very
new machines which threw so many workingmen out of
employment and so largely increased the rt reserve " army,
has laid the physical foundation for the organization of
the working class by bringing great masses of working-
men together and by rubbing off all differences between
l6o THE THEORETICAL SYSTEM OF KARL MARX.
them. It has also laid the mechanical foundation for the
future greatness of the working class by changing the
methods of production from their narrow individual foun-
dation to a broad social base.
No less contradictory is the process of accumulation of
capital in its effects on the capitalist class itself. As we
have already seen, the accumulation of capital is accom-
panied by a falling rate of profit. This naturally tends to
retard the progress of the process of accumulation, and
works in the nature of an automatic brake. This, however,
is not the only way in which the process of accumulation
counteracts its own tendencies thereby checking the tempo
of its growth. Every invention of a new machine, while
an evidence of growing accumulation of capital, and itself
a means to its increased accumulation, is at the same time
the means of an enormous destruction of existing capital,
s was already pointed out, our vast accumulations of wealth
consist in aggregations of machinery. But every invention
'•of a new machine makes useless the machine the place of
which the new one is to take, and the capital invested in the
old machines is thereby totally destroyed. The progress of
accumulation of capital is therefore accompanied by enor-
mous destruction of existing capital, which naturally retards
the growth of the sum-total of capital. Besides, the in-
vention of new machinery, by diminishing the time neces-
sary for the production of commodities, and thereby lower-
ing their values, lowers the value of all existing capital.
This, again, has a tendency to retard the process of ac-
cumulation, that is the growth of the sum-total valuation
of the machinery and other commodities of which the capi-
tal possessed by the capitalist class consists.
The capitalists as a class might regard with equanimity
these retarding tendencies or automatic checks in the ac-
cumulation of capital, for the net result of the contradictory
tendencies is still a rapid enough growth of the accumulated
mass of capital to suit even the most exacting of capitalists.
But the equanimity of the individual capitalists is disturbed
iu
"A
Cf
ECONOMIC CONTRADICTIONS. l6l
by the details of the process which result from these con-
tradictory tendencies, and by the way those details affect
their individual fortunes.
For while the net result of the process, as far as the
whole mass of capital is concerned, is a pretty rapid growth,
this growth is not at all equally distributed among the
different individual capitals. Quite to the contrary: the
contradictions of the process manifest themselves largely
by the extreme rapidity of the growth of some of the in-
dividual capitals, and the equally extreme rapidity in the
shrinkage, or the total extinction, of some other individual
capitals, due to the fact that the benefits derived and the
losses incurred by reason of the contradictory elements of
the process are not equally distributed among the individual
capitalists. Under a system based on competition they
could not very well be.
The general process of accumulation of capital, by reason
of its mechanical basis alone, leads to the concentration of
capital and production, that is to the formation of economic
centers whereat are " run together " within comparatively
small space and under one guidance large amounts of value
in the shape of costly machinery and other means of pro-
duction, and large numbers of workingmen. And the par-
ticular way in which this process works its way, by bene-
fiting some capitalists at the expense of others, leads to
the centralisation of capital, that is the amassing of large
amounts of wealth in the same hands, by transferring the
capital of those capitalists who lose by the process to
those that come out winners. This leads to an increase in
the number of large capitalists, whose capital grows at the
expense of the general body of capitalists, whose number
constantly decreases. The few chosen capitalists fatten at
the expense of their fellows.
These two processes — the concentration and the cen-
tralization of capital — accelerate each other. Particularly
does the concentration of capital become a powerful factor
in its centralization, by turning over to the control, and
162 THE THEORETICAL SYSTEM OF KARL MARX.
ultimate ownership, of the winners in the game whatever
the losers manage to save from the wreckage, as well as
the belongings of those who have managed to keep their
wealth although they have lost their economic position. By
reason of the concentration of capital, those capitalists who
have saved part of their capital, and even those who have
managed to keep their capital intact, are unable to main-
tain their independence and to continue in the economic pro-
cess as independent operators. First, because by reason of
the concentration of capital, that is to say, by reason of the
fact that, owing to the introduction of improved machinery,
a large outlay of capital is necessary in order to carry on
production on the new basis, the capital which formerly
enabled a capitalist to operate independently is now in-
sufficient for that purpose. So that even the capitalist who
still possesses the amount of capital which he formerly
possessed is unable to continue as an independent capitalist.
And secondly, even if the amount possessed by such capi-
talist should be sufficient for the technical needs of the
production-process on the new basis, he would still be un-
able to maintain an independent existence for the reason
that under the new circumstances, with the lower rate of
profit which follows, his capital would not yield sufficient
revenue to maintain him, and certainly not enough to per-
mit him to further accumulate. This creates what might
be called a " reserve " army of capitalists, or rather, half-
way capitalists, whose capitals go to swell the funds of the
real capitalists in time of the expansion of economic ac-
tivity, and these latter get most of the benefit derived there-
from. These supernumerary capitalists also usually furnish
the funds for all sorts of crazy speculative ventures, which
in their turn also accelerate the centralization of capital.
This " between the devil and the deep sea " class is rc-
teiving constant accretions from above owing to the con-
stant squeezing-out process of the devil on top by the con-
tinued accumulation of capital, and its numbers are as
constantly being depleted by its lower 'strata sinking into
ECONOMIC CONTRADICTIONS. 163
the deep sea of wage-slavery. If this process should be
permitted freely to work out its tendencies, it would result
in society being sharply divided into two unequal divisions :
a few enormously rich capitalists on top, and the bulk of
society at the bottom. A stage would be reached when, by
reason of lack of numbers, the capitalists would really cease
to be a social class, as a social class presupposes a certain
minimum of numbers, and the loss in quantity would turn,
for the capitalists, into a loss of the quality of their posi-
tion as a social class.
Will this process work out these tendencies? And what
will be its effect on the future of the capitalist system?
According to Marx these tendencies of the capitalist sys-
tem must run their fatal course, unless the system itself
breaks down before the process is at its end. 'For the con-
tradictions of the law of value which are at the basis of the
capitalist system of production and distribution are such
that, aside from the sociological results to which they must
inevitably lead, enumerated by us above, its purely eco-
nomico-mechanical existence is put in jeopardy by the laws
of its own development.
The purely economico-mechanical breakdown of the capi-
talist system will result, according to the Marxian theory,
from the inherent contradictions of the law of value, unless
the development of capitalism is in some way arrested (or
unless the system breaks down earlier for some other rea-
son), in the following manner:
In the fight for the market among the individual capi-
talists under the rules laid down by the God Competition,
each capitalist in order to survive and succeed must strive
to be able to sell his goods cheaper than his competitors in
the market, that is, he must be able to produce more cheaply
than the others so as to be able to undersell them and still
make a profit. There are various ways in which the cost
of production can be lowered. They all reduce themselves,
however, to one proposition : to make the share of the work-
ingman in the product produced by him as small as possible.
164 THE THEORETICAL SYSTEM OF KARL MARX.
This may be accomplished by directly reducing the wages
of the workingman, an expedient which cannot al-
ways be resorted to, for the reason that there is a limit
beyond which the wages of workingmen cannot be re-
duced. The more usual way, therefore, is the one which
we have already noted, that is by continually substituting
machinery in the place of live labor, by inventing labor-
saving machinery. The result, as far as the relation of the
workingman to the product produced by him, is the same
in both cases: his share therein becomes smaller. In the
latter case perhaps more so than in the former. An ad-
ditional reason why it is more often restored to. Hence the
constant rising composition of capital which we have al-
ready observed.
There is, however, another phase of this process which is
lost sight of by the individual capitalist, but which may
have dire results for the capitalist class and the whole capi-
talist system. Besides the desired result of cheapening com-
modities this process has the very undesirable result of
making the purchasing power of the laborer smaller in
proportion. In other words, the laborer ceases to be as
good a customer as he was before, and, as the capitalist
must have a customer to buy his products, whether cheap
or dear, and can not sell his products unless he has a
customer ready and able to pay for his products, he is evi-
dently placed in this dilemma, — either he must give his
workingmen a larger share of the manufactured product in
the shape of wages (or at least refrain from cutting down
the share which the workingmen receive) or destroy the
purchasing power of the workingmen, that is, of his future
customers.
This contradiction grows and is enhanced in potentiality
with the development of the capitalist system, for the rea-
son that the development of the capitalist system consists,
as we have seen, in this very cheapening of production
by the supplanting of the workingman through labor-saving
machinery. As the capitalist system develops, that portion
ECONOMIC CONTRADICTIONS. 165
of capital which goes to pay the workingman's wages dimin-
ishes very rapidly in comparison with the whole capital
employed for the purposes of production. The result of
this is, as we have seen, first, a falling rate of interest; and
secondly, a growing army of unemployed, a relative over-
population. But the same law which creates a relative
over-population, an over-production of men, also creates an
increasing over-production of goods, as the larger the army
of the unemployed the smaller is the army of workingmen
purchasers. This will finally result in the disproportion
between that portion of the manufactured product which
goes to the workingman and the whole of the yearly prod-
uct of society becoming so great that the surplus-product,
that is to say, that part of the manufactured product which
will find no purchasers, will clog the wheels of production
and bring the whole economic machinery of society to a
stop.
The stock argument against this position of Marx is that
while the immediate effect of the introduction of machinery
is to throw out of employment the workingman employed
in the branch of manufacture in which the new machines
are introduced, it at the same time of itself opens' up new
employments. When sifted down, this amounts to the con-
tention that the workingmen who are thrown out of em-
ployment in the old industry wherein the new machinery
is introduced, are re-employed in the machinery-producing
industry wherein these very machines are produced. This
contention is, however, evidently untrue for the following
reasons: As we have already seen, the reason for intro-
ducing a new or improved machine is a desire to cheapen
the manufacture of a product. This cheapening can be
effected only by saving labor, and this saving must be a
very substantial one in order to make it profitable to the
capitalist to introduce the new machine, because this re-
quires a large outlay of capital. Workingmen are usually
paid by the week, so that the outlay in capital for the em-
ployment of a hundred workingmen will be the weekly wage
l66 THE THEORETICAL SYSTEM OF KARL MARX.
of these one hundred workingmen. A new machine, how-
ever, which should dispense with the work of fifty of these
one hundred men usually requires the expenditure of a
large sum of money entirely out of proportion with the
weekly allowance of the fifty workingmen whose labor is
dispensed with. That is why modern capitalistic enter-
prises require such large amounts of capital properly to
carry them on. The new machine must therefore not only
cost in original price and expenses of keeping less than it
would cost to employ the fifty men during the time of
service of this machine, but it must also pay sufficient to
warrant the large investment of capital involved in its in-
troduction. In other words, the labor-saving quality of the
machine must be a very substantial one. A mere small
saving of labor will not warrant the introduction of costly
machinery, requiring, as it usually does, an entire change of
the system of production and large expenditures not only
in the buying of the machine itself but also in its accom-
modation in buildings, etc., and involving as it does, the
destruction of much old capital.
Now, if it were true that the workingmen who are thrown
out of employment by this machine can be re-employed in
the production of this very machine, that is to say, if it
required as much labor to produce this machine as it was
formerly required to produce the product which this ma-
chine is now to produce, there evidently will not only be
no cheapening of production, but on the contrary, produc-
tion will become more expensive for it will require the same
expenditure of work or labor (for the machine and the
product together), and a larger outlay of capital. Evi-
dently, this machine must not require in its production the
same amount or even nearly the same amount of labor
which would be required to produce the products which
it produces.
Of course, the same number of people may be employed
in producing this machine, but this machine should pro-
duce a vastly larger amount of product than was ever be-
ECONOMIC CONTRADICTIONS. 167
fore produced without it; but then, the question presents
itself, — to whom shall this additional product be sold?
The share of the workingman in this largely increased prod-
uct must be much smaller in proportion to what his share
was before the introduction of the new machinery, other-
wise production will not have been made cheaper. There
will, therefore, be a larger product to dispose of than there
ever was before, and the difficulty of finding customers be-
comes insuperable.
It may be argued that the additional product which the
workingmen will be unable to buy up will be taken up by
the capitalists. This seems a very simple way out of it,
and sounds very plausible. As a matter of fact, for long
centuries this is the way things usually adjusted themselves.
Under the old slave and feudal systems there never was
such a problem as over-production, for the reason that pro-
duction being for home consumption the only question that
ever presented itself was: how much of the product pro-
duced shall be given to the slave or serf and how much
of it should go to the slave-holder or feudal baron. When,
however, the respective shares of the two classes were de-
termined upon, each proceeded to consume its share with-
out encountering any further trouble. In other words, the
question always was, how the products should be divided,
and there never was any question of over-production, for
the reason that the product was not to be sold in the market
but was to be consumed by the persons immediately con-
cerned in its production, either as master or slave. There
was no production for the market, and consequently no
overstocking of the market. When, by chance, production
increased out of all proportion, the product could simply
be stored away, and it never interfered with the proper
prosecution of the industries in the future.
Not so, however, with our modern capitalistic industry.
It is true that all of the product with the exception of that
portion which goes to the workingman goes, now as before,
to the master, now the capitalist. This, however, does not
l68 THE THEORETICAL SYSTEM OF KARL MARX.
settle the matter finally, for the reason that the capitalist
does not produce for himself but for the market. He does
not want the things that the workingman produced, but
he wants to sell them, and unless he is able to sell them
they are absolutely of no use to him. Salable goods in
the hands of the capitalist are his fortune, his capital, but
when these goods become unsalable they are worthless, and
his whole fortune contained in the stores of goods which
he keeps melts away the moment the goods cease to be
marketable.
Who then, will buy the goods from our capitalists who
introduced new machinery into their production, thereby
largely increasing their output? Of course, there are other
capitalists who may want these things, but when the pro-
duction of society as a whole is considered, what is the capi-
talist class going to do with the increased output which
can not be taken up by the workingman? The capitalists
themselves can not use them, either by each keeping his
own manufactures or by buying them from each other.
And for a very simple reason. The capitalist class can not
itself use up all the surplus products which its working-
men produce and which they take to themselves as their
profits of production. This is already excluded by the very
premise of capitalistic production on a large scale, and the
accumulation of capital. Capitalistic production. on a large
scale implies the existence of large amounts of crystallized
labor in the shape of great railroads, steamships, factories,
machinery and other such manufactured products which
have not been consumed by the caoitalists to whom they
hau* fckiu-r «* their snare or profit in the production of
-~.mcr years. As was already stated before, all the great
fortunes of our modern capitalist kings, princes, barons
and other dignitaries of industry, titled and untitled, con-
sist of tools and machinery in one form or another, that
is to say, in an unconsumable form. It is that share of
the capitalist profits which the capitalists have " saved,"
and therefore left unconsumed. If the capitalists would
ECONOMIC CONTRADICTIONS. 169
consume all their profits there would be no capitalists in the
modern sense of the word, there would be no accumulation
of capital. In order that capital should accumulate the capi-
talist must not, under any circumstances, consume all his
profits. The capitalist who does, ceases to be a capitalist
and succumbs in the competition with his fellow capitalists.
In other words, modern capitalism presupposes the saving
habit of capitalists, that is to say, that part of the profits
of the individual capitalists must not be consumed but
saved in order to increase the already existing capital.
As a matter of fact, this saving habit, of which the apolo-
gists of capitalism make such a virtue, is really enforced
upon the capitalists. It is a sine qua non of capitalism it-
self. The very statement that improved machinery has
been introduced in any industry already implies the fact
that the capitalists of that industry have " saved " enough
out of their share of the product manufactured by the old
mode of production to be able to manufacture the new ma-
chinery or buy it from its manufacturers, and thereby in-
crease the capital employed in their business. The same
reason for " saving " which existed before the introduction
of the new and improved machinery and which caused its
introduction, namely, the competition of the market, which
compels each capitalist to accumulate capital out of his
profits, continues to exist and cause the further accumula-
tion of capital and the further introduction of new and im-
proved machinery. He cannot, therefore, consume all of
his share in the manufactured product. It is evident, there-
fore, that neither the workingman nor the capitalist can
consume the whole of the increased product of manufac-
ture? Who, then, will buy it up?
CHAPTER VIII.
THE CONCENTRATION OF CAPITAL AND THE DISAPPEARANCE
OF THE MIDDLE CLASS.
With the discussion, in the last chapter, of the tendencies
of capitalistic development, we have entered upon the proper
domain of Revisionism. While it is true that the Revi-
sionists revise to a greater or less extent the accepted Marx-
ian philosophico-historic and economic theories, this is done
only as an incidental to their criticism of the Marxian con-
clusions as to the historic course and ultimate fate of capi-
talism. Moreover, wherever Revisionists attempt to criti-
cize the fundamentals of the Marxian system, they do so
usually only in so far as it is necessary in order to attack
that superstructure of conclusions with reference to the
capitalistic system which Marx erected on those funda-
mentals. This is to be seen not only from the nature of
the criticism itself which the Revisionists pass on the Marx-
ian theory, but also from the history of Revisionism. Re-
visionism, which was at one time, before it assumed its
present proportions, known as Bernsteinianism, after Ed-
uard Bernstein, its foremost representative, began in a
very modest and unassuming way by questioning the ac-
curacy of some of the conclusions to which Marx arrived
as to the course and tempo of capitalist development. And
it was only after it appeared in the course of the discussion
that these conclusions were intimately related to the whole
structure of the Marxian theoretical system that the funda-
mentals of his system were first called into question by Re-
visionists. But eve*n then the true Revisionists did not at-
170
CONCENTRATION OF CAPITAL. 17!
tempt to pass independent criticism on the philosophico-
historic or economic theories of Marx, but merely borrowed
this criticism from older and more outspoken opponents of
Marxism. The work of Revisionism proper still remained
the criticism of what may be conveniently, though rather
inaccurately, called the sociological theories of Marxism,
that is, the theories as to the probable future development
of our social system, which we have attempted to set forth
in the last chapter. It is, therefore, not to be wondered
at that Franz Oppenheimer puts at the head of his book
on Marxism the thesis that " the foundation pillar of Karl
Marx's social theory, the most important premise for all
its important conclusions, is ' the law of capitalistic ac-
cumulation.' " The center of gravity of Bernstein's book
" Die Voraussetzungen des Sozialismus," x the chief pro-
nunciamento of Revisionism, is what Bernstein has to say
on the tendencies of the development of modern capitalism,
although he criticizes both the philosophic and economic
theories of Marx. The discussion of those tendencies forms
the bulk of Revisionist literature. And in the forefront
of this discussion is the question: Does capital concentrate
and the middle-class disappear, and as rapidly, as Marx
predicted ?
In his now famous book Bernstein attempted to prove:
ist, that capital does not concentrate in the manner, and
certainly not with the rapidity, that Marx predicted; and
2nd, that the middle-class does not disappear. To substan-
tiate his assertions he cites some statistics to show that
while there certainly is a tendency towards concentration,
and even rapid concentration, in some industries, this tend-
ency is not universal, and moreover, in the very industries
in which this tendency does exist it is in a measure neu-
tralized by the birth of new enterprises in the place and
stead of those which disappear owing to the process of con-
centration. The conclusion to which he arrives, therefore,
1 Eduard Bernstein, Die Voraussetzungen des Sozialismutund die Aufgaben
der Sozialdemokratie. Stuttgart, 1899.
172 THE THEORETICAL SYSTEM OF KARL MARX.
is that, while concentration of capital undoubtedly takes
place, it does not take place in all the capitalist industries,
and is, on the whole, extremely slow. He also cites another
series of statistical data apparently showing that the tend-
ency in the distribution of incomes in modern society is
not, as is supposed to be assumed by Marxists, towards a
wiping out of moderate incomes, leaving only a small minor-
ity with large revenues and the bulk of society with only
workingmen's wages, but, on the contrary, the tendency
is towards an increase of the number of persons whose in-
come is derived from the possession of property. From
this he argues that the middle-class does not disappear,
but on the contrary is growing.
The likelihood of the growth of the middle-class in num-
bers while capital was undergoing a steady, though slow,
process of concentration, would seem of such doubtful
nature as to raise a suspicion as to the character of the
statistics. Bernstein saw this, and he, therefore, hastens
to allay our suspicions by the following observation: The
corporation — says he — tends to neutralize to a large ex-
tent the tendency towards centralization of wealth through
the concentration of undertakings. The corporation per-
mits of a widespread splitting up of already concentrated
capital, and makes superfluous the acquisition of capitals
by individual magnates for the purposes of the concen-
tration of industrial undertakings. Wherefore, he opines,
the opinion, " prevailing among socialists," that the cen-
tralization of wealth runs parallel to the concentration of
industrial undertakings is erroneous.
In the book which Kautsky has written in reply to Bern-
stein, " Bernstein and the Social Democratic Program," *
he shows that Bernstein's statistics are unreliable and in-
complete, and that the conclusions he draws from them
are unjustified. We shall not enter here upon a detailed
discussion of these statistics, as this would be beyond the
1 Karl Kautsky, Bernstein und das Soiialdemokratische Programm.
Eine Antikritik. Stuttgart, 1899.
CONCENTRATION OF CAPITAL. 1/3
scope of the present work. Besides, we fully agree with
one Marx-critic, Oppenheimer, who, evidently disgusted
with the poor showing Bernstein made with his statistics,
declares that those who attempt to refute Marx by statis-
tics are on the wrong track. For, says he, you can only
beat Marx by his own method, and the Marxian method
is not at all statistical. Marx never relies on statistics to
prove his assertions. He uses statistics only for the pur-
poses of illustration. His proofs he gets from well-known
facts which may be recorded in the statistical tomes but do
not need any statistics to establish them. We will say here
only this: Since the disastrous attempt of Bernstein to
use statistics against the Marxian position, this weapon has
been almost entirely discarded by Revisionists. On the
other hand it must be admitted that Marxists also resort
to statistics now with less confidence than formerly. It
seems that since the publication of their books in which the
same statistics are used by Bernstein on the one hand and
Kautsky on the other and such different conclusions ar-
rived at by each, people have become distrustful of statis-
tics. Oppenheimer voices this general distrust when he
says : " Statistics are an extremely pliable mass, as the
literary controversy between Bernstein and Kautsky has
shown. With a little dialectical dexterity you can prove al-
most anything statistically."
We disagree with the learned Marx-critic that you can
prove anything and everything by statistics. But we do
believe that you can prove nothing by statistics unless you
handle them intelligently. Of themselves statistics do not
prove anything. No more than facts of themselves prove
anything. If it were so there could hardly be two opinions
on most points which have been in controversy ever since
scientific research began. It requires intellect to read the
facts. It requires intelligence to read statistics. Further-
more, it requires great intelligence to gather statistics, and in
this respect statistics, which are mere records of facts, are
a poorer basis for scientific generalizations than facts of
174 THE THEORETICAL SYSTEM OF KARL MARX.
observation. Unfortunately our statistics are not gathered
by the people who are to use them, and as they are neces-
sarily not full and complete, they must be used with great
care and discrimination. Of course wrong or unintelligent
handling of statistics will not make them " prove " anything
that they really do not prove, as Oppenheimer seems to
think, but it will render them worthless.
Kautsky has proven that Bernstein's statistics do not
prove his assertions. The reason for it is that Bernstein
handles his statistics unintelligently. But even Kautsky's
intelligent handling could not make them yield any great
results because of the incompleteness of our statistics and
of the lack of intelligence in their gathering. Hence the
general dissatisfaction on both sides with statistics. We
will, therefore, follow here the Marxian method of making
only such facts the basis of our argument as require no
statistical tables to prove them, but merely to illustrate them.
Before proceeding, however, to discuss these facts we
want to call attention to some significant circumstances in
connection with the Revisionist movement and its literature.
First in point of time and importance is the tone of early
Revisionist Marx-criticism. We have already called atten-
tion to the nihilistic character of this literature. Now we \
desire to add that this nihilism was a gradual growth and
was forced on the revisionists by their own inability to
solve the problems which confronted them. At its inception
Revisionism was merely doubtful. Doubt is the leit-motif
of Bernstein's first literary attempts at revision. In the
second place is to be considered the inability of the old-
school Marxists to stem the flood of Revisionism, notwith-
standing their great efforts. While the flood of Revision-
ism is now at a standstill, if not subsiding, this is not due
to the efforts of the Marxian leaders on the theoretical
field, but to its own practical barrenness. And yet, there
was enough in what was written by Marxists to show the
utter untenableness of the revisionists' position. Kautsky's
book was a crushing blow to Bernstein's attempts at the-
CONCENTRATION OF CAPITAL. 175
orizing. Yet it passed almost without any appreciable re-
sults: the question of Revisionism was not settled, although
it should have been if it were a question of soundness of
argument. Thirdly, we must notice the fact which we have
already mentioned as the reason for the failure of the Re-
visionist movement: the fact that notwithstanding its great
literary influence the Revisionist movement was absolutely
barren of practical results as far as the socialist movement
was concerned.
•All of these facts and circumstances is proof positive
that there must have been something in the development
of modern economic life which caused the appearance of
the revisionist movement as an intellectual endeavor to take
cognizance of and explain this development. It is also
clear that this development, whatever it may be, was not,
or at least not fully, reflected in our statistics, which ac-
counts for the fact that neither side could prove its case
conclusively by the aid of statistics, and the consequent
distrust of all statistics. What was that something in the
development of modern economic life, and how does it
affect the Marxian theory?
The trouble with Bernstein and the rest of the Revision-
ist writers is that they do not go below the surface of
things, and therefore do not know what " struck them," to
use an inelegant but adequate colloquialism. Bernstein
talks of the " new middle-class," the " wide distribution of
incomes," the large number of stockholders in the big cor-
porations or " trusts," and the influence of corporations on
the centralization of wealth, but nowhere does he examine
these things systematically or in any way analyze them so
as to see their real significance in modern economic life,
or even their exact meaning. Nowhere does their connec-
tion with the theoretical system which he criticizes appear.
That is why his book makes the impression x^f the rambling
talk of a man who does not know his own mind. The truth
of the matter is he did not know his own problem. He
had a vague feeling that there was a problem demanding
176 THE THEORETICAL SYSTEM OF KARL MARX.
solution, but he did not understand what it was. Hence
his doubting tone, the lack of a clear and definite purpose,
or even the statement of a clearly defined problem for the
solution of others. Hence the overlooking of the problem
by those who took up the fight against him. Hence, lastly,
the endless discussion to no purpose. Yet there was a
definite problem, and had Bernstein understood it sufficiently
to enable him to state it clearly it "would have found an
answer long ago.
At about the time Bernstein was writing his famous
book, the present writer stated the essential point of this
problem (which is in our opinion, together with the in-
ability to appreciate the scope of modern imperialism, at
the bottom of the whole Revisionist movement), in one
sentence in the course of an unassuming magazine article.
A good many have laid claim to the honor of being the
original Revisionist. It is not the intention of the present
writer to enter the lists as a contestant for this honor. This
incident is mentioned here only for the purpose of showing
that the air was then pregnant with certain questions which
required answering. The present writer specifically re-
nounces all claims to that high honor of being the Original
Revisionist, for as a matter of fact he never was a Revision-
ist. It is of the essence of Revisionism to see or feel the
problem and not to see its solution. The article referred
to, however, not only stated the essential point of the prob-
lem, but also indicated its solution.
The problem is to harmonize the Marxian teaching with
the development of corporate methods of doing business.
We have already seen how Bernstein attempted to explain
the discrepancy between the statistics as to the concen-
tration of industrial undertakings on the one hand and as
to the accumulation of wealth on the other, by a reference
to the corporate methods of doing business. We shall see
later that Bernstein has mistaken the influence of the de-
velopment of corporations in that particular respect, and
in general it may be said that Bernstein's weakness con-
CONCENTRATION OF CAPITAL. 177
sists in his failure to appreciate and develop the strong
point of his argument — the development- of corporations.
The fact, however, that Bernstein and the rest of the Re-
visionists failed to present it properly makes the phenom-
enon none the less real.
The Marxian analysis of the capitalist system and his
deductions as to the laws of its development proceed upon
the assumption of the absolute reign of the principle of
competition. It was on the basis of that assumption that
he declared that during the progress of capitalist develop-
ment "one capitalist kills off ten," thereby centralizing all
wealth in the hands of a steadily diminishing number of
persons, eliminating the middle classes and leaving society
divided into two classes only: capitalists and workingmen.
But what if competition should be abolished or checked?
What if the capitalists, large and small, should decide not to
compete any more with each other, or to restrict the area and
intensity of such competition, and divide profits amicably
instead of fighting with each other over their division, so
as to avoid the necessity of killing each other off? Evi-
dently the result would be the arrest of the processes de-
scribed by Marx in the event of the entire abolition of
competition, and a retarding of those processes in the event
of its mere checking. This is just what must happen ow-
ing to the development of corporations. The supplanting
of individual enterprise by that of corporate is merely an
attempt to avoid the results of competition, if not altogether
abolish it. The effectual abolition of competition by the
so-called Trusts, which are merely the logical result of the
ordinary corporation-enterprise, is notorious and, prac-
tically, undisputed. But it is not only the Trust that inter-
feres with competition. The primary, nay, the only pur-
pose of a legitimate c.orporation is to blunt the edge of
competition. It is designed either to nullify or suspend
the baneful effects of past competition, or to prevent or
diminish its ravages in the future. There can be only two
legitimate reasons for organizing corporations. Either tQ
178 THE THEORETICAL SYSTEM OF KARL MARX.
enable those whose capital is insufficient to keep abreast
of the latest requirements of production to remain in the
field from which they are individually forced out by the
march of events, by combining their several insufficient
individual capitals into one sufficient to meet the new re-
quirements; or, to enable those whose capital is sufficient
to undertake independently to split up their large capitals
into many small ones, each to invest in many undertakings
and each undertaking to consist of many investments, in-
stead of each taking up one of the undertakings on his
own hook. In the first case it is an effort to beat fate by
those vanquished in competition. It is an effort by those
whom competition has .forced out of the economic arena
to stay in, by representation at least. In the second case
it is an effort to limit the effects of competition in the
future by dividing up and limiting its risks and liabilities
(it should be remembered that the essence of a corporation
is limited liability), and by providing a sort of mutual in-
surance between capitalists and capitals.
Here, therefore, is a check to the development of the
capitalist system as outlined by Marx. A check which is
destined to arrest or at least retard that development. The
formula of centralization of wealth and of the disappear-
ance of the middle-class evidently needs revision.
The question of the disappearance or the non-disappear-
ance of the middle-class was complicated also by another
and minor phenomenon which apparently swells the num-
bers of the middle-class and particularly influences the dis-
tribution of incomes. We refer to the so-called " new "
or non-productive middle-class. This phenomenon is very
interesting in another aspect of modern capitalism, the as-
pect of waste and its uses in the capitalistic system. But
of that aspect of this phenomenon we shall treat later at
some length. Here we are interested only in the mere fact
of its existence. And we shall, therefore, merely say here
that the existence of this " new " middle-class, particularly
while its origin and character remained unexplained and
CONCENTRATION OF CAPITAL. 179
undifferentiated from the ordinary middle-class, consider-
ably complicated the, in themselves, not very easy tasks of
determining the influence of the corporation on the destinies
of capitalism and the effect of this new departure in capi-
talism on the Marxian theoretical system.
Of course it can easily be seen that these matters do not
in any way affect Marx's analysis of the working of capi-
talism and the laws governing that system while it lasts.
As we have seen before, competition is of the essence of
that system. This is recognized by the friends as well as
the foes of that system. It has been embodied in its written
as well as in its unwritten laws. " Restraint of trade,"
which is the legal term for restricting or abolishing compe-
tition, was illegal and punishable by the common law of
England, that classic land of capitalism. All our anti-trust
laws are based on the assumption that competition — which
is " the life of trade " — is the basis of capitalism, and,
therefore, one of the inalienable property-rights of every
man living in a capitalistic society. They are nothing
more than a statutory enactment of the common law of
capitalism that to interfere with competition is to interfere
with the life-blood of capitalism, and therefore mortal sin in
the eyes of capitalistic law. It is, therefore, not a refuta-
tion of the Marxian analysis of the capitalist system to
show that tendencies in the development of that system
which Marx said would continue to exist as long as capi-
talism lived, disappeared in whole or in part when the basic
principle of that system was abolished or modified. Natu-
rally enough, the tendencies of capitalism cannot manifest
themselves in a society where there is no capitalism, nor
can they fully develop under limited capitalism if such a
thing be possible.
What may be affected by the phenomenon which we dis-
cussed above is not Marx's analysis of capitalism, nor even
his prediction that capitalism as it existed is going to de-
struction,— but his prediction that on the ruins of the capi-
talist system will be reared the edifice of a socialist so-
180 THE THEORETICAL SYSTEM OF KARL MARX.
ciety. As we have seen, Marx's socialism is based en-
tirely on his conclusions as to the future development of
certain tendencies of capitalism. If those tendencies are
abolished, even though with the basic principle of capitalism
itself, or modified along with that principle, what warrant
have we to say that socialism is inevitable ? It is upon those
tendencies that we are dependent for .the conditions which
are a prerequisite to socialism, according to Marx, and with
the abolition of those tendencies the conditions which will
bring socialism may never arise. The questions to be
answered, therefore, are: Is capitalism going to be sup-
planted by some other system, or is it merely going to be
limited or modified? And if it is to be supplanted what will
take its place? After Capitalism, what?
II.
In what relation does the existence or non-existence of
a middle class stand to the possibility or inevitability of
Socialism? It is generally assumed that, according to
Marx, all the middle class must disappear and society be-
come divided into a handful of capitalistic millionaires on
the one hand and poor workingmen on the other before a
socialist form of society can supplant our present capi-
talist system. There is, however, no warrant for such an
assumption. Marx nowhere says so expressly. Nor is
there anything in Marx's historico-philosophical views, that
is, in his Materialistic Conception of History, from which
such a conclusion could rightfully be drawn. All that that
theory implies is that the evolution of society depends en-
tirely on the development of its economic forces. And in
those passages of his great work where Marx speaks of the
evolution of society from Capitalism to Socialism, it is only
the social forces of production and distribution that claim
his attention. But Marx is no fatalist. He does not be-
lieve that society develops automatically without the aid
of the human beings who compose it, or of the social classes
CONCENTRATION OF CAPITAL. l8l
into which it is divided. He takes into consideration the
human beings with which these social forces work. This
is, in fact, the essence of his theory of the class-struggle.
In this respect the different social classes have, according
to his theory, their bearings on the evolution of society.
In his analysis of the evolutionary tendencies of the capi-
talist system Marx notes and accentuates the presence of a
tendency to eliminate the small bourgeois or middle-class
which he believes to be rapidly disappearing. He lays great
stress on this point, and evidently believes it to be a move-
ment of very great importance in the evolution of capi-
talism towards socialism. A careful reading of Marx, how-
ever, will not fail to disclose the fact that Marx did not
consider the complete disappearance of that class all-essen-
tial, and that it was only the disappearance of that par-
ticular middle-class of which he treated that he considered
of any importance at all. In other words, it was not the
entire absence of any middle-class or social stratum be-
tween the big capitalists and the workingmen, that he con-
sidered of importance for the realization of his socialist
ideals, but it is the presence of a certain particular class,
possessing certain particular characteristics (or at least its
presence in any such great numbers as would lend it social
strength) that he considered obnoxious to the movement
of society toward socialism. In order to understand
thoroughly the Marxian position on this question we must
consider his general estimate of the different classes or
strata of society as factors in the evolution of society from
capitalism to socialism. And that, again, we can only un-
derstand if we consider them in the light of the Material-
istic Conception of History. This we shall now proceed
to do.
Our readers are already familiar with the Marxian phi-
losophy of history from the discussion in the early chapters
of this work. We have there shown the absurdity of the
claim that Marx and his followers denied the influence of
ideas on the course of history. Here we want to go a step
l82 THE THEORETICAL SYSTEM OF KARL MARX.
further and say that, in a sense, Marx was one of the most
idealistic of philosophers. And the sense in which we mean
this is in relation to this very question of the influence of
ideas. Marx believed in the reality of ideas, both as to
origin and influence. There were philosophers who, like
Hegel, did not believe in the reality/ of our material world.
They believed that the only real world was the world of
ideas, and that the material world was only a manifesta-
tion of the development of the absolute idea which de-
veloped according to laws of development contained within
itself. To such philosophers there could, of course, be no
question of the influence of ideas on the course of history.
To them there was nothing real in the whole course of
history except this development of the idea. These phi-
losophers are, of course, the real idealists (and, incidentally,
more deterministic than Marx). But of those philosophers
who believe in the materiality of the material world, Marx
is easily foremost in the reality which he ascribes to ideas.
According to Marx, ideas are firmly rooted in reality .and
are therefore of abiding influence while they last, and not
easily susceptible of change. In this he radically differs
from whose to whom ideas have a mere aerial existence, com-
ing from the land of nowhere, without any particular rea-
son in our historic existence and, therefore, vanishing with-
out regard to our social environment, its needs or tribula-
tions. This Marxian esteem of ideas must always be borne
in mind when discussing the influence of the human be-
ing as a factor in the making of his own history. Let us,
therefore, keep it in mind in the following discussion.
What are the characteristics of the socialist system of
society in which it differs chiefly from our present capi-
talist system? First, the social ownership of the means of
production — the absence of private property in them. Sec-
ondly, the carrying on of all industry on a co-operative basis
— the absence of industrial individual enterprise. Thirdly,
the management of all industrial enterprise democratically
— all " captains " of industry and all other industrial dig-
CONCENTRATION OF CAPITAL. 183
nitaries to be elective instead of appointed by divine pre-
rogative, and to hold office by the consent and during the
pleasure of the governed.
Now let us see what classes of our present society are
suited to bring about such changes, and which are not.
The bearer of the socialist revolution is the modern Pro-
letariat. It is the class of the proletarians that has the
historic mission of tearing down the capitalist system of
society. Remember well: not the poor man, nor the work-
ingman, but the proletarian, is going to do this work.
There were poor men before, so were there workingmen.
But they were not proletarians. So may there be poor
now, and even poor workingmen, who are not proletarians.
The modern proletarian is not merely a poor man, nor is he
necessarily a poor man in the ordinary sense of the word.
Nor is he merely a workingman, although he necessarily is
one. He is a workingman — usually poor at that — under
peculiar historic conditions. Those conditions are that he
is not possessed of any property, that is, the only property
that counts socially, — ! means of production. By reason of
this condition he is placed in certain social relations, both
as to his own kind and as to his social betters, as well as to
the social machinery. Through this he acquires certain
characteristics of mind and body, a certain mentality and
psychology which make him peculiarly fitted for his historic
mission.
We will not attempt to give here an exhaustive descrip-
tion of his mental and psychological nature. We will only
denote his character by a contrast: he is in every way just
the reverse of the peasant. He had to be that, according to
Marx, in order to be a fitting instrument for the carrying
out of his historical mission. Marx's attitude towards the
peasant is most characteristic. The peasant was a positive
abhorrence to him, and he eliminated him "from his prom-
ised land. This had the peculiar consequence that in coun-
tries where the peasantry is now undergoing the process
of " capitalization," as in Russia, for instance, the Marx-
184 THE THEORETICAL SYSTEM OF KARL MARX.
ists have been accused by the peasant-loving Utopians M
all sorts of horrible designs against the poor peasants, (vf
course, Marx and the Marxists have nothing but com-
passion for the poor peasant. But, besides seeing clearly
the hopelessness of their case, they recognize the fact thit
the peasant, were he to exist, would be the greatest obstacle
in the way of socialism. First let us note his ideas as to
property. By reason of his occupation and the environ-
ment in which he and his forefathers have lived for at>es,
he has contracted such a love for his land, his house, his
cattle, and everything else which he calls his own^ that he
will find it more difficult to separate from them than a
millionaire from his millions. Their worthlessnvss has
nothing to do with the case: their value can hardly be
measured in money. This colors all his ideas about prop-
erty. He and his forefathers before him have lived on this
particular spot of land, and all his family history is con-
nected with it. Here are buried the labors -and sufferings
of generations. All his own woes, and his pleasant mem-
ories (if he has any) are intimately associated with this
patch of ground. Here he was born and here he hopes to
die. Every tree, every building, is the result of his own
and his family's great cares and labors. Every animal is
his friend and companion in toil and misery. Most of them
have been reared by him, even as were his own children.
He will not enter the promised land if he has to give up
his ruined, worthless, tax-eaten property for it. The " sac-
redness " of property rights to the peasant, the tenacity
with which he holds on to it, is well recognized by those
who have studied his character. This " idea " of his as to
private property, in view of his stolidity and immobility,
due to the immobility of his surroundings and the sameness
of the methods and nature of his work, would make him
an inveterate enemy of socialism and a stout upholder of
capitalism. But, aside from this, he is unfitted for a so-
cialist society, and particularly unfitted to make a fight for
it, because of his inability to co-operate with others, A
CONCENTRATION OF CAPITAL. 185
peasant is the greatest individualist imaginable, at least as
far as boorishness, suspicion, opinionatedness, and the other
" individualist " virtues are concerned. For centuries he
has led an isolated 'and self-sufficient existence. He lived
by his own toil without the help of others. He never came
into contact with others except to be robbed and oppressed
and occasionally to be cheated. No wonder he is such an
individualist. Nor has he been fitted by the countless gen-
erations of oppression which he has undergone, or by the
work to which he is accustomed, to the arduous and com-
plicated duties of a self-governed industrial community.
All this would make the old-fashioned peasant an inveterate
enemy of socialism, notwithstanding his great poverty and
ruined existence, if he were to survive. But he is not to
survive. We cannot enter here upon a discussion of the so:
called agrarian problem. One thing may be stated; how-
ever, without any fear of contradiction: the old peasant, as
Marx knew him, and the old economic surroundings and
social environment which produced him, are no more, ex-
cept in very backward countries, and there they are dis-
appearing before the onward march of capitalism. With
the old-fashioned peasant passes away the mainstay of
private property and the bulwark of reaction. There is no
other social class that could quite fill his place in this re-
spect.
The bourgeois has few of the characteristics of the peas-
ant. He is quick and always on the qui vive. His love
and attachment for property are not as pronounced as those
of the peasant. He has not the kind of property which
becomes individualized and may be personified. He has
himself produced none of it. He cannot form any lasting
friendship with his stock of goods or the machines used in
his manufactory. They are liable to constant change and
can be easily supplanted by others of their kind. In most
cases it is in their quick disposal that his chief advantage
lies, and he parts from them without regret. As a matter
of fact he never cared about them: it is their money value
l86 THE THEORETICAL SYSTEM OF KARL MARX.
or equivalent that is dear to him. In other words, it is not
the property itself that he values or cares for, but the ad-
vantage derived from its possession; although in some
cases, particularly where business is done in the old-fash-
ioned way, and life is arranged correspondingly, there may
be some love of property as such with reference to some
kinds of property: usually the place of business or abode
and its furnishings and belongings.
With these characteristics the bourgeois is ill-adapted to
take the place of the peasant as a defender of property and
of reaction. Yet, Marx considers his disappearance of
considerable importance for the inauguration of the so-
cialist state. Why?
To the vulgar materialists who insist on calling them-
selves Marxists this question presents no difficulty. They
reduce' the Materialist Conception of History to the simple
formula: "everybody for his own pocket." And as the
pockets of the bourgeoisie are presumably going to be in-
jured by the transformation from capitalism to socialism,
that class must necessarily be against the change, and there-
fore it must be removed in some way in order to pave the
way for socialism. This perversion of the Materialistic
Conception of History is, unfortunately, very widespread,
and for good reason: It is a reproduction of the practice
and theory of capitalism. Of the " common " practice, of
course, but also of the very highest theory of which capi-
talism is capable. It is, in effect, a mere paraphrase of the
" intelligent egoism " — the greatest height to which the
capitalist intellect could rise. The fact that this theory
can easily be proven to be logically absurd and historically
false will not diminish its vogue as long as the condition
to which it owes its origin remains unchanged. Only gradu-
ally, following in the wake of the economic changes, and
at a distance at that, will a truer understanding force its
way.
Except in the case of seers like Marx. With all his dis-
like for the bourgeoisie Marx never believed that all bour-
CONCENTRATION OF CAPITAL. 187
geois, or their intellectual and moral leaders, simply fol-
lowed the dictates of their pockets, personal or otherwise,
as can easily be seen from numerous passages scattered in
his many writings, and particularly in the " i8th of
Brumaire."
What makes the bourgeois character unfit for socialist
co-operation, and his ideology one of the chief mainstays of
capitalism, is the independence which the possession of
property gives him. While he has no particular love for
his property, or, to be more exact, for the objects of his
property, he values very much the independent social status
which the possession of property gives him, no matter what
this property consists of. As a matter of fact it is not
the particular property that he is concerned about, but its
social exchange-value. For the purpose of his social status
it is not the actual objects of his property that count, but
the social attributes and possibilities which attach to all
property. That is why he stands up for the abstract prin-
ciple of private property, something which the peasant is
very little concerned about as long as its practical enjoy-
ment is not interfered .with. The social existence of the
old-fashioned bourgeois, his everyday economic life, make
him accustomed to strive for and cherish this independ-
ence founded upon the possession of property, and his
ideology becomes decidedly individualistic. In his foremost
intellectual representatives this crystallizes into some such
system as that of Herbert Spencer, and looks upon social-
ism as- a form of slavery. The alertness and aggressive-
ness of the class only accentuate the craving of each in-
dividual for absolute economic freedom, for being let alone
to fight the battles of life. And the success of the class
only whets its appetite for further conquests, and makes
it impatient of any restraint, while its intellectual achieve-
ments give it one of the brightest weapons^ever wielded by
a ruling class.
A good deal has been written and said about the sup-
posed great influence of force as a social factor, and again
l88 THE THEORETICAL SYSTEM OF KARL MARX.
the vulgar materialists have contributed their little share
to the general confusion. Of course brute force has been
and will be used by all ruling classes, both in acquiring
and maintaining their dominion. But brute force alone
never did, and never could, sustain a ruling class for any
considerable length of time. In order to see the correct-
ness of this assertion it is sufficient to bring to mind the
fact that the ruling class is always a minority, usually a
small one, of the population of a country, and that, taken
man for man, the members of the ruling class seldom
possess more physical strength than the members of the
subject class. The force of the ruling class is not nat-
ural but acquired, and is social in its character. It con-
sists in its organization, which permits it to use part of
the strength of the subject class, and sometimes the whole
of it, for the subjugation of that class. Sometimes the
mere fact of its own organized condition may be sufficient
to hold the superior but disorganized force of the sub-
ject-class in awe and trembling. But even then it is not
mere brute force, for organization itself is a moral and not
a physical force. This is evidenced, by our language ; we
speak of a physically superior force, which is incapable
of properly exerting itself for lack of proper organization
and discipline, as being " demoralized." This applies,
however, only in exceptional cases. Usually the ruling
class depends on something outside its own organization to
maintain its supremacy. This something is the social or-
ganization of the whole community or nation. It is by
using the power of the whole social system for its own
purposes that the ruling class is able to maintain its su-
premacy at a time when that is clearly against the gen-
eral interest or against the interest of large portions of the
subject class or classes.
The basis of this social power exercised by the ruling
class is usually the economic system in vogue, which makes
the subject-class economically necessarily dependent upon
che ruling class. But this does not always suffice. Very
CONCENTRATION OF CAPITAL. 189
often, therefore, the ruling class depends, to some ex-
tent at least, on purely moral suasion for the continuance
of its power. Religion was, therefore, from time imme-
morial, the handmaid of the temporal power, except where
it was itself a temporal power and thus united in itself
the functions of mistress and maid. With the waning of
religion and the passing of its influence, science and phi-
losophy have taken its place, and usually perform the same
functions with equal alacrity and facility. That does not
mean, of course, that either religion or science and phi-
losophy were invented by the ruling classes in order to
keep the subject classes in bondage. The ruling classes •
merely make use — sometimes proper and sometimes im-
proper— of a means which they find at hand. The point
is that usually the lower classes get their "ideas" —
their religion, science, art, philosophy — from the upper
classes, and these are apt to be such as express and repre-
sent — in short " idealize " — the mode of life of those
classes and the principles underlying the same. This is
always true when the lower class depends on the upper
for its economic existence. At such times the economic
virility of the ruling class expresses itself in a buoyant
and aggressive ideology which seems to, and often does,
express the interests and aspirations of society as a whole.
But no ruling class has ever had such a great opportunity
of exercising such great moral or ideal influence on its
subject class as has the bourgeoisie, owing to the great
and manifold development of the arts and sciences during
the time it held its sway. This unprecedented wealth of
ideas has had the remarkable effect, first of all, of making
the bourgeoisie itself drunk with its power and almost
mad in its desires and aspirations. No king has ever
believed himself more God-chosen to rule than has the
bourgeoisie, nor has any ruling class ever laid such pre-
tensions to the absoluteness and immutability of the laws of
its rule as does the bourgeoisie. Or, rather, we should
say, as did the bourgeoisie in the heyday of its power.
190 THE THEORETICAL SYSTEM OF KARL MARX.
And while it was in the heyday of its power the bourgeoisie
managed to permeate the working class with its ideals,
habits and modes of thought, perhaps more than any ruling
class ever influenced a subject class. This was due, on the
one hand, to the unprecedentedly large extent to which
the working class has been permitted to participate in the
benefits resulting from the general spread of knowledge,
and on the other hand to the peculiarly forcible way in
which the economic argument is brought home to the mod-
ern workingman. Under no preceding social system have
the economic woes of the ruling class been so quickly and
with such dreadful effect reflected to the subject-class.
We must never, therefore, forget the great importance
which the influence of the bourgeois ideology has on the
modern proletariat, particularly in the early stages of its
development, although, as we shall see later, during and
by virtue of its development it formulates an ideaology
of its own.
The capitalistic " ideas " and habits of mind are in-
culcated into the working class by the capitalist class, in-
tentionally and unintentionally, by and through its lower
stratum, or what is usually called the " middle class." So
long as there is a large and virile middle class the work-
ing class will be largely under its domination and in-
fluence, morally and aesthetically. It is with this class
that the working class comes into immediate contact so-
cially. It is on this class that the workingman fixes his
hopes and aspirations for the future. It is this class that
teaches him at kindergarten and at school, that preaches
to him at church and in " ethical " societies, and it is this
class that gathers and sifts for him the news of the world
and explains it to him in his daily newspaper, and gives him
his popular science, his art and his " literature. v
It is because of those " ideal " characteristics of the
old-fashioned bourgeoisie, the old middle-class, of capitalist
society, and even more so because of the " ideal " influ-
ences of that class on the working class, that Marx con-
CONCENTRATION OF CAPITAL. 19!
sidered its disappearance of such great importance in the
movement of society towards socialism. That is, in so
far as he considered such disappearance of any moment
in itself, outside of its being a mere indication of the
movement of the economic forces of society. For it must
always be borne in mind that it is the development of the
economic forces that is the real power working for social-
ism, and any influence which any class or group of men
may have on that movement, except as an expression of
such development, is merely secondary.
III.
In the first section of this chapter we stated that the
development of corporate methods of doing business
brought a new factor into the development of capital-
ism which apparently worked at cross-purposes with
those tendencies of capitalistic development which, accord-
ing to Marx, were to result m the destruction of the middle
classes' of capitalist society. We also stated there that this
presented to Marx-st«dents the problem of harmonizing the
Marxian prognosis, as to the tendencies of development
of capitalism with this new factor, and that the Revision-
ists were not equal to the task, and therefore came to the
conclusion that Marx's prognosis was wrong. We inter-
rupted the argument in order to give in the second section
a characterization of the different social classes of the capi-
talist society which Marx had before him, in order to un-
derstand his position with reference to them. This was
necessary in order that the reader may get the full meaning
of the argument that we are going to present here in an
endeavor to show that the Marxian prognosis of the develop-
ment of capitalism alid its ultimate fate, as well as the
delineation of the social system which is going to take its
place, need no revision, any more than any other part of his
theoretical system. We shall now, therefore, return to our
revisionist friends, and particularly to their leader, Eduard
Bernstein.
192 THE THEORETICAL SYSTEM OF KARL MARX.
The main points of Bernstein's position on this subject,
as already stated, are: ist, that as a matter of fact the
concentration of capital is not as rapid as Marx or some
Marxists imagined or believed. 2d, that as a matter of
fact there is no centralisation of capital, that wealth does
not accumulate in few hands only, to the exclusion of all
others, and that the middle class is, therefore, growing in-
stead of disappearing. And 3d, that the reason for the
divergence in the tendencies of the concentration of capital
on the one hand, and the centralization of wealth on the
other, is due to the development of the new social factor,
the corporation.
This being a purely theoretical discussion, the first point
can hardly be considered. Theoretically only the tendency
of the evolutionary phenomena is of any importance. What
may, therefore, have been of very great importance in the
discussion between Bernstein and Kautsky, which embraced
other than purely theoretical matters, may be of only second-
ary importance here. The length of time which History
will take to complete the evolutionary, process outlined by
Marx ;s no part of the Marxian theoretical system. Marx
never stated it, and it could, therefore, only be surmised what
his opinion on this subject was. But even if he had ex-
pressly stated it, that would not, of itself, make it part of
his theoretical system. Besides, the ground is so well cov-
ered by Kautsky that one does not feel like doing less, and
can hardly do more, than reproduce the Kautsky argument
in full. And as considerations of space do not permit
us to do that, we must refer those of our readers who may
be interested in this phase of the discussion to the original.
As to whether, and how far, the second point made by
Bernstein is of any importance in the discussion of the Marx-
ian theory will be considered later. Here we will examine
the phenomenon supposed to have been noted by him. We
have already mentioned the fact that the only proof on
which Bernstein relies to establish his second proposition ara
certain statistics as to incomes. But right here the fallacy
CONCENTRATION OF CAPITAL. IQ3
of his statistical method becomes apparent. Aside from
the fact that there is no standard by which you can measure
the different grades or divisions of indbmes as high, middle
or low, and any such division must, therefore, necessarily be
arbitrary, and aside from the fact that such standard must
vary, not only from country to country, but even between
places in one country and even in close proximity with each
other, and (and that is of paramount importance) from time
to time, there is the cardinal defect that income, as such, is
no index whatever to either social or economic position. A
man's income does not, necessarily, place him in any social
position, ancf need not, necessarily, be the result of a cer-
tain economic condition, except under certain exceptional cir-
cumstances when, as Marx would put it, quantity passes into
quality. The mere statement of a man's income does not,
therefore, give his social position or economic condition,
unless it be first proven that certain incomes can only be
derived in a certain way, or from certain sources. Bern-
stein glides over carelessly from incomes to property, as-
suming that the derivation of a certain income implies the
possession of a certain amount of property. But this non-
chalance is due to an absolute lack of understanding of the
real questions at issue. As a matter of fact, a given amount
of income does not always, nor even in the majority of cases,
indicate the possession of a given amount of property. A
farmer, a manufacturer, a grocer, a teacher, an army officer
and a mechanical engineer, may all have the same income,
and yet their social position, their economic condition, and
the amount of property which each possesses may be entirely
and radically different. The question is, or should be, not
zvhat is a man's income, but what does he derive it from?
And, under what conditions, and in what manner does he
do it. And this does not mean merely that the inquiry
should be directed to the amount of property he possesses,
or whether he possesses any at all, but also, if he does pos-
sess property, to the question of what it consists of and how
it is employed in order to yield the income. The importance
194 THE THEORETICAL SYSTEM OF KARL MARX.
of this last point will immediately suggest itself if the reader
will recollect what we said in the second section of this
chapter on the psychological and ideological effects of the
different kinds of property and the different occupations,
put we shall discuss this more at length further below.
As we have already stated, however, in the first section
of this chapter, the real strength of Bernstein's argument
does not lie in the statistical data with which he attempts
to prove his alleged facts, but in the social phenomenon
which he observed and which seems to counteract the evo-
lutionary tendencies of capitalism described by Marx. The
real meat of his argument lies in the third point mentioned
above. The real question is: how does the modern develop-
ment of that social economic factor, the substitution of cor-
porate in the place of individual economic action on the
part of the capitalists, react on the fortunes of that class.
Our inquiry must not, however, be limited to the question
of the division of income within that class, but also as to
how, in what manner and under what circumstances, this
division is being effected. We must find out not only how
much each capitalist gets as his share of surplus-value cre-
ated by the working class, but how his share is determined
and what he must do in order to get it. Into what relations
does his getting it, and the manner in which he gets it, bring
him to his fellow-capitalists, the other classes of society, and
society at large, that is, the social organization as a whole.
Bernstein says, in discussing the importance of the Marx-
ian theory of value, that the fact of the creation by the
working class of surplus-value, and its absorption by the
capitalist class being provable empirically as a fact (to his
satisfaction, of course) it makes no difference by what eco-
nomic laws it is brought about. This may be good enough
reasoning when one starts out from so-called " ethical "
premises, but is absolutely inadequate from the scientific his-
torico-economic point of view. We have already sufficiently
pointed out the great importance of the difference which does
exist, in its purely economic bearings, and now we wish to
CONCENTRATION OF CAPITAL. 195
insist on it because of what might be termed its social or
ideological importance. For it is not the mere fact of the
creation by one class of surplus-value or a surplus-product
and its absorption by another class, but the way in which it
is done that gives its character, including its ideology, to
society as a whole and to each and every class and subdi-
vision of a class therein. In examining, therefore, the in-
fluence of the development of the corporation on the fortunes
of the capitalist class, it is not only the effect upon its num-
bers, but also and mainly the effect upon its character that is
to be considered, for on the latter may depend the character
of the whole social system. Upon the latter may also de-
pend the durability of the social system and its speedy trans-
formation into another. We shall, therefore, examine the
question from both aspects.
And first as to numbers. Does the substitution of cor-
porate for individual effort arrest the shrinkage of the num-
bers of the capitalist class or develop a tendency to its ex-
pansion, as Bernstein asserts? Decidedly not. -And even
Bernstein's empirical-statistical method, poor as it is, shows
this. Bernstein does not deny the absolute and relative
growth of the working class. And as the working class
and capitalist class can only grow, aside from their pro-
portional growth with the growth of -population, at the ex-
pense of each other, they evidently cannot both grow at the
same time. But this is just, what is evidently happening
if Bernstein is to be believed. Both the capitalist class and
the working class are simultaneously growing at the expense
of each other ! Only the uncritical handling of mere figures
could betray him into such an absurdity. A careful examina-
tion, on the other hand, of the actual phenomena under con-
sideration would have shown him that while the corporation
may arrest the rapidity of progress in the shrinking process
of the capitalistic ranks, it cannot do awayvwith the process
itself. The capitalist class must shrink !
In this connection we must, in the first place, consider
the fact, already noted by Marx, that the corporation itself
IQ THE THEORETICAL SYSTEM OF KARL MARX.
is a means towards the concentration of capital, with all
that it implies. By combining the smaller capitals of the
individual capitalists, and more particularly by turning over
to the big capitalists the small capitals of the middle class
and upper strata of the working class, either directly or in-
directly, by means of banking and savings institutions, such
tremendous concentrations of capital and industrial under-
takings are made possible which otherwise could not, or
could only with great difficulty, take place. This places the
whole industrial system on a higher plane of capitalization
and must necessarily force out a lot of small capitalists by
making their capital inadequate for the undertakings in
which they are engaged, and the return on their capital, ow-
ing to the increased falling of the rate of profits, insufficient
to sustain them. Thus, while on the one hand this form per-
mits these small people, or some of them, to combine their
capitals and thereby gain a new lease of life, long or short
as the case may be, it on the other hand gives additional
impetus to the very forcing out process which makes their
individual independent position untenable. While in one
way it retards the shrinking process it, in another way, ac-
celerates it.
Another point to be considered in this connection is the
fact that the corporation is the chosen and well-adapted
means of all forms of dishonest and speculative undertak-
ings, by means of which the unscrupulous rich manage to
relieve the confiding, because helpless, poorer strata of the
capitalist class of whatever individual competition has left
to them. In times of " prosperity " all sorts of industrial
nnd commercial undertakings are organized which no one
would dream of organizing if he had to do it with his own
capital. But as the corporation form permits the " promo-
tion " of these schemes at the expense of the public, there
will always be found enough " promoters " who are willing
to " take a chance " with and at the money of the " general
public," which is composed of the lower strata of capitalism.
This " public " not being in a position economically to com-
CONCENTRATION OF CAPITAL. 197
pete with the magnates of capital, are willing to nibble at
their schemes in the hope of finding some profitable em-
ployment for the remnants of their former fortunes or their
savings.
Then comes the panic or the " contraction " and all the
bubbles burst, leaving the field strewn with the corpses of the
small fry, the would-be-capitalists despite the fact that their
means were insufficient to give them standing as capitalists
individually. Another and very important aspect of this
phenomenon will be considered later in another connection.
Here we simply want to point out the fact that the corpo-
ration is not merely a means of permitting the small capital-
ists to participate in the economic undertakings which they
could not tackle on their own account, but also of relieving
them of their small capitals, and either wasting them or
transferring them to the large capitalists, directly or indi-
rectly. This was pointed out at the beginning of the dis-
cussion by Kautsky, and since then we have had abundant
proof of the great possibilities of this relieving process.
The exposures of Thomas W. Lawson have shown that the
very loftiest pillars of capitaldom engage in this relieving
process, not merely as an incident to the natural " expan-
sion " and " contraction " of the commercial world, but de-
liberately, with malice aforethought, manufacturing to order
" expansion " and " contraction " in order to accelerate the
relieving process. These exposures have also shown that
where the small fry do not nibble themselves in propria
persona, their bankers, savings banks and other depositaries
do it tor them, as if they were vying with each other to
prove the correctness of the Marxian prognosis.
It must not be assumed, however, that this relieving
process is due entirely to dishonesty on the part of the big
sharks of capitalism in dealing with their ^weaker brethren.
On the contrary, the process itself is a natural one, due to
the natural workings of the corporation. This process is
only accelerated by the exposed " evils," by the abuses of the
corporate form of doing business, for there are natural, as
198 THE THEORETICAL SYSTEM OF KARL MARX.
well as artificial, panics and contractions, and they all re-
sult in the transfer of the capitals of the small fry to the
big sharks, or in their utter waste and destruction, as will
be seen later.
Aside, however, from the " evils " and " abuses " of the
corporation system, aside from the casual, although periodi-
cally recurring, waste of small capitals and their transfer to
the big magnates of capital in times of panics and contrac-
tions, the usual and necessary results of the corporation sys-
tem, its very uses and mode of operation are such as to make
it almost nugatory as a preservative of the numbers of the
capitalist class — as a means of staving off the destruction
of the independent middle class.
The ordinary and usual course of corporation business
is such that only a few persons, the rich who organize and
control it, get most or all of the benefits derived there-
from. In order that we may clearly understand this point
we must bear in mind the difference between business and
loan capital. There is a difference between the return a
man gets from his capital when he employs it in business
himself and when he lends to another capitalist to be used
in the same business. In the first contingency he gets all
the profit that is made in the business, in the second only
that part of the profit which is called interest. The amount
of interest is not always the same proportion of the amount
of profit realized, but it is always only a share and never
the whole thereof. In determining the proportionate share
of the owner of the capital and the undertaking capitalist,
respectively, in the profits realized in the business, all other
things being equal, regard is had to the risk assumed or un-
dergone by the owner of the capital, the lowest proportion
being paid as interest where the owner of the capital takes
no risks whatever. This is interest proper. The balance of
the profit, whatever is left after the deduction of this in-
terest for the mere use of the capital with no risk attached,
remains in the hands of the capitalist, according to capital-
istic notions, for his work of supervision of the industrial
CONCENTRATION OF CAPITAL. 199
undertaking and the risks involved in it. If a capitalist lends
his money on insufficient security he gets higher interest.
But this higher interest is really not pure interest; it is in-
terest proper together with an additional premium (part of
the profit in its narrower sense) paid for the risk run by the
man who makes the loan. '
In a corporation the work of supervising the undertaking
engaged in by the concern is not done by the stockholders,
but by paid officers and employes. These officers and em-
ployes are always the rich who organize and control it, and
they not only eat up all that part of the profits which goes
to the capitalist for his work of supervision, but usually a
great deal more in the shape of high salaries and incidental
expenses. This part of the profit of all of the capital in-
terested goes to the big capitalists only, the small fry get
none of it. And if by some chance a small capitalist should
get this (which would only be possible in the exceptional
case where all stockholders are small men) it would still
remain true that only one would get it, and the remaining
stockholders would not get that part of the profit which goes
to every independent capitalist.
There remains, therefore, to the stockholding capitalist
only the interest proper and that part of the profit which
goes as compensation for risk. In this respect the stock-
holding capitalist is placed in the same position as the lend-
ing capitalist; the greater the risk involved in holding stock
in a certain corporation the greater will be his return (if he
gets any), and the smaller the risk the less his return, in
the shape of dividends. But the risks which he takes here
are not only the risks of the business venture, but also
those of dishonest corporate management. Besides, even in
the question of the profitableness of the business there is the
possibility of fraud, for he is obliged to rely on the judg-
ment of others who may be interested only in the venture to
the extent of their ability to draw large salaries. The re-
sult of all this is that the prospective stockholder is desirous
of investing in a safe corporation, that is to say, in cor-
20O THE THEORETICAL SYSTEM OF KARL MARX.
porations at the head of which are big capitalists who hold
out some kinds of guaranty or promise as to results. But
the safer the corporation the more is the investor, not only
the bondholder but even the stockholder, reduced to the
position of a person who lends his money to it, at least as
far as the amount of profits he receives on his capital is
concerned. This can be seen any day on the stock exchange.
The safer the corporation the more is the dividend reduced
to the level of mere interest. In speaking of dividend
in this connection we mean, of course, the amount of the
dividend as a percentage on the capital invested. Sometimes
a very safe corporation pays very large dividends (although
this is unusual), but in such an event the value of the stock
will be so much above par as to bring the dividend down to
the proper level. The small capitalist who desires to invest
in a corporation is, therefore, between the Scylla of taking
all sorts of risks which are not present in the case of the
independent industrial undertaker, and the Charybdis of get-
ting no return on his capital except interest.
But as interest is only a share of the whole profit, and
usually a small one at that, it is very evident that not all,
and not even most, of the capitalists who possess sufficient
capital to furnish them an independent income at the pre-
vailing rates of profit, if they could remain independent un-
dertakers, will be able to derive such income as stockholders
of a corporation. A good many of them will necessarily
have to fall out at the bottom. Usually these are the peo-
ple who furnish the capital for all sorts of venturesome
schemes with alluring promises, which result disastrously.
Being unable to maintain their position as capitalists by
investing in safe corporations, they desperately risk their
small capitals in these undertakings, hoping to retrieve by a
stroke of luck what they lost by the force of economic evo-
lution.
But this is not yet all. Those smaller capitalists whose
capital is for the time being sufficient to maintain them as
rentiers of capitalism, as investors in safe corporations, are
CONCENTRATION OF CAPITAL. 2OI
by no means sure of their position. We have already shown
that the rate of profit has a tendency to fall. With the fall-
ing of the rate of profit falls that portion of it which is paid
as interest, directly or in the shape of dividends, to bond
and stockholders of corporations. This makes a capital
which is sufficient to maintain a man independently to-day
insufliciint for that purpose to-morrow. Thus the falling-
out-at-the-bottom process increases as capitalism progresses.
Some of the causes and processes noted above are slow in
their operation. But one thing is certain, they are there
and working their deadly havoc in the ranks of the capi-
talistic cohorts constantly and surely. The tendencies of
capitalistic development cannot, therefore, be mistaken. Not
only can not the capitalist class, that is, its lower stratum
which is commonly called the middle class, grow, but it
must surely and constantly diminish.
This diminishing process in the capitalist ranks, the pass-
ing from the capitalist class into the proletariat, may, how-
ever, and, owing to certain circumstances which will be
considered later, frequently does assume such forms that the
whole process becomes veiled and not easily recognizable.
Here again the corporation plays a part, although not a very
important one. Its part here consists in furnishing some
additional folds for the veil which covers this process.
Some Marx critics, and Bernstein is among them, talk as
if Marx saw only one process, and that one the constant
passing of former capitalists of the middle class into the
ranks of the proletariat. No doubt there are some passages
to be found in Marx's writings which at first blush give such
impression. And as a general statement of a tendency this
is true too. But that does not necessarily exclude some
cross-current which may affect the original and prime tend-
ency described by him, although it cannot completely nega-
tive it. Hence the danger of relying on single passages in
Marx without careful examination as to their connection,
and the immediate purposes for which they are used in the
connection in which they are found. Hence; also, the ease
2O2 THE THEORETICAL SYSTEM OF KARL MARX.
with which all sorts of contradictions are found in Marx,
according to his critics, as was already pointed out in an-
other connection. It took Marx several bulky volumes to
expound systematically his theoretical system, and then his
work remained unfinished. He could not at each point re-
count all the circumstances which might affect or modify the
tendencies or laws discussed, and which might be contained
in other parts of his work. He assumed that the reader
would remember them and read all the passages relating to
the same subject together. Sometimes he purposely gave
absolute form to a statement which he intended to qualify,
and made certain assumptions he himself did not believe in,
intending later to modify the absolute form of the statement
or show the incorrectness of the assumption, in order to
more clearly and systematically present his theory.
As regards the matter now under discussion there can
be no doubt but that Marx did not mean to say that all
those who are reduced from the ranks of capitalism by the
progress of capitalism become proletarians. Some of them
may, for a time at least, remain in the position of half capi-
talist, half proletarian, in that they may derive a part of
their income from their property and part thereof from
their labor. But even those who have lost all their prop-
erty may still become proletarians in the antique sense only,
that is, persons who possess nothing, but they may not be
proletarians in the modern sense of the word, that is, labor-
ers who are not in possession of their means of production.
They may cease to be capitalists and still not become labor-
ers; they may live by their wits instead of by their labor, or
become mere sponges on their former co-classites. It is our
opinion that, with the progress of capitalism, the percentage
of this last mentioned class of people is growing larger
among those who lose caste by reason of the elimination
process of the middle class.
Hence the cry of the so-called " new middle class," raised
by the Revisionists. Hence, also, the peculiar features of
the statistics as to incomes. It is not because there is no
CONCENTRATION OF CAPITAL. 203
process of Centralization of wealth accompanying the Con-
centration of capital, as Bernstein would have us believe,
that there is apparently a wide diffusion of small incomes
which are not the proceeds of wages. This phenomenon is
due, first, to the fact that with the concentration of capital
wage-slavery has been growing upwards, embracing con-
stantly new occupations, such as by their character and re-
muneration were not properly within its domain on a lower
rung of capitalistic evolution. This class has been particu-
larly increased by the development of the corporation. And
secondly, to the increase of the class of people, who, although
not possessing any property, still manage to maintain them-
selves in real or apparent independence and without com-
ing, formally at least, within the purview of wage-slavery.
This brings us to the question of the effect of the recent
economic development on the character of the middle class.
Before passing, however, to the examination of that ques-
tion, we desire to note the fact that much of the talk and
statistics about the supposed slowness of the process of the
concentration of industrial undertakings is due to the merely
apparent and formal independent existence of many under-
takings and undertakers that are really mere dependent
parts of a large, concentrated, industrial enterprise. And
we also desire to mention here the fact that Heinrich
Cunow, one of the ablest of the younger generation of so-
cialist writers in Germany, has done splendid service in
pointing this out.
But, one may ask, while it may be true that the processes
which you have 'described show that not all the members
of the present or former middle class can remain in their
position of small capitalists, deriving their income from
the possession of property, there still does remain this " new "
middle class which is not reduced to the position of pro-
letarians. This " new " middle class, while it possesses no
property, or not sufficient property to count economically,
is still a class distinct and apart from the proletariat, and if
numerous enough is a force to be reckoned with. And as to
204 THE THEORETICAL SYSTEM OF KARL MARX.
the great numbers of this class the income statistics are
certainly an indication. Those incomes which can not pos-
sibly be the result of wage-labor must be the incomes of this
" new " middle class, unless they are the incomes of the
property owning middle class, and the income statistics
therefore certainly prove at least one thing, and that is that
the " new," property-less middle-class, together with the old-
propertied middle-class, certainly form at present quite a
formidable class and diminish only slowly. Where is the
difference, as far as the subject that interests us (the ap-
proaching transformation from capitalism to socialism), is
concerned, between the old and the new middle classes?
Isn't Bernstein right, after all, when he says that if the
coming of socialism were dependent on the disappearance
of the middle class the socialists might as well go to sleep,
for the time being at least?
In answer to such questions we will say: As already
pointed out, it is not part of the Marxian doctrine that all
middle classes must disappear before the advent of social-
ism, and the fact, therefore, that there may be developing
a new middle class is no warrant for the assertion that the
Marxian theory needs revision. Provided, of course, that
the new middle class is sufficiently different to make a dif-
ference. It was shown already that Marx's prognosis as to
the centralization of wealth through the disappearance of
the property-owning middle-class is correct. And this is
one of the decisive moments in the evolution from capitalism
to socialism. It is not so much the merging of the persons
who compose the middle class into the proletariat that is re-
quired as their severance from their property. For the
passing of our society from its capitalistic form of produc-
tion to a socialistic form of production, that is, for the so-
cialization of the means of production, the only things that
are of paramount importance are, first, that these means of
production should be social in their character, and the more
social the better (the concentration of capital) ; and, second,
that these means of production should lend themselves to
CONCENTRATION OF CAPITAL. 205
social management, that is, be in the hands of as few per-
sons as possible (the centralization of wealth). It is of
comparatively little importance how the surplus-value pro-
duced by the working class, the income of the capitalist class,
is distributed. The question of this distribution is of any im-
portance only in two aspects: ist, in so far as it reacts on
the centralization of wealth by permitting greater or less
numbers to maintain their position as property-owners; and,
2d, in so far as it may affect the ideology of the different
classes of society.
In the first aspect, as w£ have already seen, the " new "
middle-class is harmless. Its existence does not retard the
process of the centralization of wealth, but, on the contrary,
is its direct result. It is, therefore, only in the second as-
pect that any significance whatever could be attached to it.
Let us see what it amounts to?
But before proceeding any further we must state that the
possession of capital, property, being of the essence of a
capitalistic class, the introduction of this so-called " new "
property-less middle-class has created no end of confusion.
A very great proportion of what is termed new middle class,
and appears as such in the income statistics, is really a
part of the regular proletariat, and the new middle class,
whatever it may be, is a good deal smaller than might be
supposed from the tables of incomes. This confusion is
due, on the one hand, to the old and firmly-rooted prejudice,
according to which Marx is supposed to ascribe value cre-
ating properties only to manual labor, and on the other
to the severance of the function of superintendence from
the possession of property — effected by the corporation as
noted before. Owing to these circumstances large sections
of the proletariat are counted as belonging to the middle
class, that is, the lower strata of the capitalist class. This
is the case with almost all those numerous and growing occu-
pations in which the remuneration is termed " salary " in-
stead of " wages." All these salaried persons, no matter
what their salaries may be, who make up perhaps the bulk,
206 THE THEORETICAL SYSTEM OF KARL MARX.
and certainly a great portion, of the " new " middle class,
are in reality just as much a part of the proletariat as the
merest day-laborer. Except, of course, in those instances
where, by reason of the amount of their salary, they are in a
position to, and do, save and invest. In so far as such
investment takes place (as in the case of those who invest
the remnants of their capital while depending for their
support mainly on some useful occupation) they are on the
border line between capital and labor, and are akin in their
position to the ruined peasants who, before abandoning
their villages, attempt to remain farmers by doing " some-
thing on a side." These cases are, however, not very numer-
ous, and their condition is merely transitory. Another ex-
ception that should be noted is of those cases where the
salary is so large that it evidently exceeds the value of the
labor of the recipient. It will be found, however, in such
instances, that such salary is paid only to capitalists who
are really in control of the corporation which pays it to
them, and is part of the process by which the big capitalists
relieve the small ones of part of the profits coming to them.
With these negligible exceptions, salaried persons are really
part of the proletariat, no matter what they themselves
think about it.
It is true that by reason of their descent, associations,
habits and modes of thought these persons feel a certain
solidarity with the upper class rather than with the class
to which they belong. But this does not change their social-
economic status, and, so far as their usefulness for the
work for socialism, they present a problem which is only dif-
ferent in degree, but not in kind, from the general problem
of the organization of the working class for its emancipa-
tion from wage-slavery. In the solving of the special prob-
lem, as well as in the general, the change in the character
of the middle class is of quite some importance.
And the character of the middle class has changed. Nay,
the character of the whole capitalist class has changed by
reason of this substitute of corporate undertakings in place
CONCENTRATION OF CAPITAL. 207
of individual enterprise. And not only this, but the char-
acter of our whole social system is undergoing a change
of quite some importance by reason thereof. And these
changes have already wrought great changes in the ideology
of the different classes composing our society, and are go-
ing to entirely revolutionize it. The famous phrase of a
well-known English statesman, " We are all socialists now,"
was not as idle as some people supposed it to be. Of course
the gentleman who uttered it may not himself have quite
realized its full import, but the fact that he uttered it is one
of the proofs of its correctness, although he may have at-
tached to it an entirely different meaning from the one we
give it. Its real meaning is this: The philosophy of indi-
vidualism, the ideology of private ownership of property,
and particularly of individual enterprise, is doomed; and the
philosophy of collectivism, the ideology of the collective
ownership of the means of production and of the social
organization of human enterprise, is fast taking its place.
The change is taking place not only in the realm of juris-
prudence, which is the immediate expression of accomplished
economic facts, but also in the remoter fields of art and
philosophy. As yet there is chaos. None can mistake the
" breaking up of old ideals," but only very few can see the
whole meaning and import of it: that a new society, and a
new ideology to correspond, are forcing their way and mak-
ing rapid strides.
Spencerianism, that purest expression of capitalism, and
not so very long ago the reigning philosophy, is dead and
forgotten. And every new day surprises us by the official
throwing overboard of some remnant of that philosophy
which was still clung to the day before. Socialism is the
order of the day. But not merely the " menace of social-
ism," which simply reflects the growth of the organiza-
tion of the working class, but the recognition of collectivist
principles and the expression of collectivist ideas. The ses-
sion of the American Congress just closed gave remarkable
evidence of that. It is not what was accomplished there, but
208 THE THEORETICAL SYSTEM OF KARL MARX.
what was conceded in principle that interests us here. It is
not, therefore, the legislation or attempted legislation for
the benefit of the working class only that must be considered,
but all legislative attempts which show this change of ide-
ology.
In this connection we desire to state that there is some
basis of fact in the cry raised in some capitalist quarters
that Roosevelt is more "dangerous" as a socialist than
Bryan. We do not think much of the socialism of either,
and believe that they are both quite " safe," but we really
think that Roosevelt is not quite as " sane " from the capi-
talist point of view. The difference between them is that
between reactionary and progressive capitalism. It is the
difference between anti-trust laws and railway rate legisla-
tion. Both classes of legislation are purely capitalistic meas-
ures, designed to protect the small capitalists against the big
ones. But the methods adopted are based on fundamentally
different social principles. As was already mentioned in an
earlier part of this chapter, the anti-trust law is a capitalistic
measure pure and simple, based on the theory that the State
had only police duties to perform. Railway rate regu-
lation, on the other hand, proceeds upon the theory that
social means of production are there primarily for the benefit
of society as a whole, and are, therefore, subject to social
control. That does not mean that railway rate regulation
is of any importance in itself. Neither regulation nor cvm
ownership of railways by the capitalistic state are of any
importance. But the assumption of regulation, particularly
in a purely capitalistic country like the United States, is of
significance as showing the drift of ideas. It is also of
significance that attention is diverted from incomes, the
Bryan mode of attacking capitalism, to the control of produc-
tion, the field on which the real battles for the reorganiza-
tion of the social structure will have to be fought out.
These changes in ideology have not come about 1><
people have obtained a " better insight " into the true rela-
tion of things, but because the basis of all ideology, the eco-
CONCENTRATION OF CAPITAL. 209
nomic relations within our society, have changed, are chang-
ing. The private ownership of the means of production is
the basis of capitalistic society, and therefore of all capital-
istic ideology. And by ownership is not meant merely the
derivation of revenue, but real ownership, that is, control.
A capitalistic class not owning any capital, as the so-called
" new " middle class, is a contradiction in terms, an anomaly.
But no less anomalous is the position of a capitalist who
owns but does not control his property. That wonderful
artist, Gorky, with the true insight of geriius, has divined
this truth and has expressed it when he made one of his
characters say that the true importance of wealth is the
power of control that it gives one over other people. But
this power of control does not lie in the revenue which one
derives from wealth, but in the control of this wealth itself,
which in our society is synonymous with means of produc-
tion.
The truth is that the " new " property-less middle class is
not a capitalistic class. It is no middle class at all. It is
true that it stands in the middle between the capitalist class
and the working class, and in this sense it is more of a
" middle " than the old middle class which was nothing but
the lower strata of the capitalist class. But it is no class.
A class is not merely an aggregation of individuals having a
more or less similar income obtained in a more or less sirm'-
lar way. In order that any aggregation of individuals
should really form a social class they must perform some
social-economic function. The existence of the " new mid-
dle class" is entirely too aerial to give it position as a so-
cial class. They are either merely " hangers on " of some
other class, or hang in the air entirely, where they obtain
their income from " wind." This " class " has none of the
characteristics and none of the ideas of the bourgeoisie
which we have described. It not only has no love for prop-
erty as such, because it does not possess any, but it has not
even that love of economic independence and individual en-
terprise which is the characteristic of the true bourgeois.
210 THE THEORETICAL SYSTEM OF KARL MARX.
It has no veneration for property or property-rights, no love
of economic independence, and consequently no constitu-
tional abhorrence of " paternalism " or of socialism. All
this " class " cares for is its income, and that is why its ide-
ologists, the social reformers of all grades and shades, put
so much stock in the question of income and always push it
to the foreground. To the old bourgeois, in control of his
property, it was a question of freedom and independence ; he
looked upon socialism as upon the coming slavery, he ab-
horred it for its very comforts which everybody shared alike.
Not so with the new middle class. Any one of them is ready
at any moment to change his windy existence for a govern-
mental job, service of some corporation or any other occu-
pation, provided his income will not be diminished, or even
if it is diminished to a certain extent, provided it is assured
to him for any length of time. For it must be remembered
that this new middle class suffers just as much from inse-
curity of income as the working class, if not more, to which
must be added insecurity of position. It is very natural
that a " class " so all up in the air should not form any
firmly rooted ideology of its own, that it should be drifting
all the time, and should, therefore, be almost worthless as a
social force either for or against the introduction of a new
order. But, on the other hand, it is, because of the very
nature of its social existence, extremely restless, ever ready
to change, and ever longing for a change which would finally
do away, or at least alleviate, its unsettledness, give it a
rest. " Governmental interference " has no terrors for it.
It feels the need of a stronger hand than that of the indi-
vidual in arranging the field of battle for the struggle for
existence. If such a makeshift may be dignified into an ide-
ology, its ideology is State Socialism.
But it is not only the property-less, only-in-namc, middle
class that has lost its old bourgeois ideology. The rem-
nants of the old middle class, the stockholding small capi-
talists, have lost their ideology with the control of their
property. For it was that control, the individual enterprise,
CONCENTRATION OF CAPITAL. 211
that was at the basis of it. Furthermore, with this class
as with the "new" middle class, it has become merely a
question of income. For property without control is again
a contradiction in terms. These people really have no prop-
erty, although they and others think they do. What they
have is a right to a certain income. They are nothing but
rentiers, annuitants, either of public or private corporations.
They are ready at any time to, and do, exchange their sup-
posed property for more formal annuities and other rentes.
Robbed of its economic independence, deprived of the con-
trol of its property and of the opportunity of individual
enterprise, it has no other aspirations except to preserve its
comforts, its incomes. If it has any ideals at all, its ideals
may be said to be just the reverse of the old bourgeois mid-
dle class. By the very nature of its way of managing its
affairs the propriety, effectiveness, and, above all, the neces-
sity of socialization, is brought home to it. Furthermore,
being minority stockholders, the members of this class nat-
urally look upon the general government, the social organiza-
tion as a whole, as the protector of its rights against the
upscrupulous methods and the rapaciousness of the big capi-
talistic sharks. It is true their ideas in this respect are not
those of the revolutionary proletariat, it is not the social
organization of work that they dream of, but the social
organization of the distribution of gain. By a curious
mental process they fill the old forms of their ideology, ac-
cording to which the State was merely a policeman, with
an entirely new substance by extending the police powers
to fields which would have horrified their fathers had they
lived to see the thing. The ideology of this class, like that of
the new middle class, is a curious mixture of old and new
ideas, but one thing is clear in the midst of all this confusion,
that its antagonism to socialism is not a matter of principle
but of convenience.
Hence the "breaking up of ideals," the great changes in
the ideology of capitalistic society which we have already
noted. Hence, also, the so many different forms of " social-
212 THE THEORETICAL SYSTEM OF KARL MARX.
ism " with which we are blessed. Hence, lastly, the " social
unrest " in capitalistic quarters.
For it is a mistake to think that the "social unrest"
comes wholly, or even mostly, from below. Of course there
are moments of unrest in the working-class. But it will be
found, upon close examination, that a good deal of it is
merely the reflection of the unrest of the higher layers of
society. Furthermore, it will be found that the more the
working-class emancipates itself from the mental and moral
tutelage of the upper class, the more it develops an ideology
of its own, as we shall see in the next chapter, and the less
the " unrest " in its midst : the more steady its thoughts and
actions become. Before the working-class ideology is full-
grown, however, and while it is yet under the tutelage of
the middle classes, the changes in the ideology of those
classes which we have described are of great importance, and
even the very restlessness of that ideology and psychology
is of importance. For it first creates restlessness below,
thus calling out nervous activity, and when that nervous
activity has resulted in a firm and clear ideology it cannot
offer any effective resistance.
Whatever, therefore, has been saved of the middle class
by the corporation with regard to numbers, has been de-
stroyed, and very largely by this very agency, as to c/iar-
acter. What was saved from the fire has been destroyed by
water. The result is the same: the middle class, that middle
class which Marx had in view, the middle class which was a
factor obstructing the way towards socialism, is doomed.
This is not all, however. The corporation has not merely
failed to save the middle class. It is performing a positive
and great service in the work of transformation of our so-
ciety from capitalism to socialism. That work is nothing
less than the abolition of private property and the substitu-
tion of collective property in the means of production ; the
demolition of the basis of capitalism and the rearing of the
ground work of a socialist system of society. It is hard
to think of our capitalists as doing this work, but that is
CONCENTRATION OF CAPITAL. 213
what they are doing nevertheless. In their frantic efforts to
save themselves, the capitalist class is doing nothing less
than undermining its very existence, cutting out the ground
from under its own feet, abolishing, not only the basis of
capitalism, but the basis of all class-society — private prop-
erty. This fact has not been noticed hitherto and given
the attention which it deserves, because, again, of the ques-
tion of income which has obstructed our vision. Because
our big capitalists get the benefits, the income, of our cor-
porations, it has not been noticed that they don't own the
property from which these incomes and benefits are derived.
In looking with rapturous gaze or hateful abhorrence at the
enormous fortunes of our kings, barons, and lesser gentry,
the startling fact has been lost sight of that these fortunes
are mere titles to revenue and not to property. The law
recognizes this fact clearly. The great John D. Rockefeller,
ruler of the great Standard Oil and all its domain, has no
more title to any part of the property of the great corpora-
tion of which he is the master than the poorest elevator boy
employed in one of its buildings, and should he attempt to
appropriate a dollar's worth of it by using it for himself, the
law will treat it as a case of conversion, or larceny, of some-
body else's property.
And let no one say that this is mere legal formality.
Legal forms always express economic realities. Sometimes
they survive their substance and become mere empty forms.
In such cases they are records of past economic realities.
When they are not records of the past they always express
present reality. In this case the form is full of substance.
It not only expresses a present reality, but, as it happens,
presages the future. As yet the collective form substituted
by the capitalists is crude and undeveloped as to form, and
the collective bodies are still " private," that is, the benefits
derived therefrom are enjoyed by private individuals. The
proper distribution of the benefits, that distribution which is
suited to the new form of ownership, which in itself is only
an expression of the new form of production, will follow as
214 THE THEORETICAL SYSTEM OF KARL MARX.
surely as harvest follows the planting of the seed. This
work of readjustment of the mode of distribution to the new
mode of production and ownership, and the full development
of all the three processes to the limit of their capacities for
the benefit of all members of society, will remain for the
fully developed, organized and educated working class. But
in the preparatory work of transition, particularly in the
ruthless destruction of all the elements of the old social sys-
tem, our friends the enemy have rendered, and are rendering,
signal service. In their mad effort to escape their fate the
capitalists are only cheating the gallows by committing
suicide.
CHAPTER IX.
THE PROLETARIAT AND THE REVOLUTION.
We now come to consider the active factor of the revolu-
tion from capitalism to socialism, — the Proletariat. It may
be stated without any fear of contradiction that this question
of the role of the proletariat in bringing about the trans-
formation from capitalism to socialism, and how and under
what circumstances it will execute this role, in which last /
is included the question of the so-called breakdown of capi- ^
talism, is the real bone of contention between the so-called
old-school Marxists and the Revisionists; this being merely
the reverse side of the question of the Social Revolution, and
all other questions are only tributary to it. As was
already stated before, the purely theoretical questions of
philosophy and political economy are not the proper field of
Revisionism, and these theories are drawn into the discus-
sion only in so far as they have, or are believed to have, any
bearing on the present question. The paramount question of
revisionism is : Who is going to bring about the transforma-\^,
tion from capitalism to socialism, and how will it be done?
Everything else is only interesting in so far as it throws
some light on this subject. We have already shown in the
preceding chapters the role which some of our social ele-
ments, those which may be called passive, will play in this
transformation and how the ground will be prepared and
broken. Now we will consider the active factor, its de-
velopment and the conditions under which the work can be
successfully done by it.
Before proceeding any further, however, attention must
be called to a peculiar feature of the discussion on this sub-
215
2l6 THE THEORETICAL SYSTEM OF KARL MARX.
ject, which is the result of a basic misunderstanding of the
Marxian theory.
Almost all of the Revisionists proceed upon the theory,
more or less clearly expressed, that Marx expects the trans-
formation from capitalism to socialism to be effected by at
least two independent causes: the economic breakdown of
the capitalist system, and the revolt of the proletariat against
capitalism. Some go even so far as to split up the second
cause into two: the growing weight of the burden of capi-
talism on the working class, and the growth of the power
of the working class. Each of them therefore attempts to
argue against the allowance of that particular cause, the
admission of which he thinks would interfere with the
method of fighting for socialism which he believes to be the
best. Most of them are vehemently opposed to Marx's sup-
posed prediction of an economic breakdown of capitalism,
the so-called Zusammenbruchstheorie, and try to prove that
socialism will never be brought about by that " factor " and
that we must, therefore, look ^to other factors if we want
socialism. A good many of them are also opposed to the
ascribing of any great importance to the increasing burdens
of capitalism on the working class, the so-called Vcrclaul-
ungstheorie.
It is sometimes really amusing to see how they argue
about these " factors " or causes as if these were absolutely
independent of each other and could exist one without the
other and without reference to each other. One of them,
Rudolph Goldscheid, the latest in the field, has even man-
aged to show that these various factors neutralize each other
by working in different directions. And none of them has
ever stumbled on the fact which is as clear as day-light to
those who can see, that Marx presents only one argument
showing only one cause for the transformation from capital-
ism to socialism — the economic development of society
which evolves the economic conditions necessary for the
change, and produces the social forces which will bring it
about. The cause being one, its separate parts or aspects
THE PROLETARIAT AND THE REVOLUTION. 2I/
must be considered with relation to each other and with a
view to the whole, and cannot be understood unless so con-
sidered. Of course the different points involved may be
taken up one by one, but always bearing in mind the rest.
So when we will consider here any one of these points it
will always be with a view to what we have to say on the
points considered before or to be considered later.
In order that we may bring out clearly before our readers
the different points made, we will consider them from two
points of view: first, as to how far Marx's description of, the
tendencies of development of capitalist society, in so far as
they affect the conditions of the working class, is correct;
and, secondly, as to what conditions of the working class
must exist, according to Marx, in order to make it a proper
vehicle for carrying out the historic mission which Marx
ascribes to it. Before going into details, however, we desire
to place before our readers the description of the trans-
formation from capitalism to socialism traced by Marx him-
self in one of the finest passages ever penned by mortal
hand:
" As soon as the laborers are turned into proletarians, their
means of production into capital, as soon as the capitalist mode
of production stands on its own feet, then the further socializa-
tion of labor and the further transformation of the land and
other means of production into socially exploited and, therefore,
common means of production, as well as the further expropria-
tion of private proprietors, takes a new form. That which is
now to be expropriated is no longer the laborer working for
himself, but the capitalist exploiting many laborers. This ex-
propriation is accomplished by the action of the immanent laws
of capitalistic production itself, by the centralization of capital.
One capitalist always kills many. Hand in hand with this cen-
tralization, or this expropriation of many capitalists by few,
develop, on an ever-extending scale, the co-operative form of
the labor process, the conscious technical Application of sci-
ence, the methodical cultivation of the soil, the transformation
of the instruments of labor into instruments of labor only usable
in common, the economizing of all means of production by
j
j
2l8 THE THEORETICAL SYSTEM OF KARL MARX.
their use as the means of production of combined, socialized
labor, the entanglement of all peoples in the net of the world-
market, and with this, the international character of the capi-
talistic regime. Along with the constantly diminishing number
of the magnates of capital, who usurp and monopolize all the
advantages of this process of transformation, grows the mass
of misery, oppression, slavery, degradation, exploitation ; but
with this too grows the revolt of the working class, a class al-
•ways increasing in numbers, and disciplined, united, organized
by the very mechanism of the process of capitalist production it-
self. The monopoly of capital becomes a fetter upon the mode
of production, which has sprung up and flourished along with,
and under it. Centralization of the means of production and
socialization of labor at last reach a point where they become
incompatible with their capitalist integument. This integument
is burst asunder. The knell of capitalist private property sounds.
The expropriators are expropriated."
This passage which describes one process, clearly indi-
cates that Marx distinguished three moments of that process
which he evidently considered of importance: (i) The
technical, and, so to say, purely material side of the process,
the concentration and centralization of capital, which fur-
nishes the technical and material (in the more limited sense
of the word) basis of the future society; (2) The effect of
the technical and material side of the process on the mem-
bers of the society, particularly the working class, which
creates the active force ready and able to make the change
from the present system to the future; and (3) The result-
ing conflict of the technical and material side of the process
and the needs of society in general and of the working
classes in particular, which necessitates the change.
The first moment was considered by us at length in the
preceding chapters, the third moment was already touched
upon by us in a preceding chapter, and will be treated at
length in the succeeding one; the second moment will be
considered here.
Does the mass of " misery, oppression, slavery, degrada-
tion and exploitation" grow? The Revisionists say: No;
THE PROLETARIAT AND THE REVOLUTION. 219
the condition of the working class is not getting worse but
improving. And furthermore, say they, Marx is wrong in
asserting that the growth of misery, etc., of the working
class is necessary for the transition from capitalism to social-
ism. How — they ask — can a miserable, oppressed, en-
slaved, degraded, and exploited working class fight the bat-
tle and win the victory for Socialism? In support of their
contention as to the actual condition of the working class
they point to the facts, or alleged facts, that the hours of
labor have shortened and the wages have increased since
the writing of that passage by Marx; that the working-
men are better housed and better fed now than formerly and
that pauperism is on the wane rather than on the increase. •
They make those assertions in a manner as if they were
stating undisputed facts which require no proof to support
them. As a matter of fact, however, these assertions are
very far from stating undisputed facts. It is sufficient to
mention some very recent literature on the subject, such as
Hunter's " Poverty," Spargo's " The Bitter Cry of the Chil-
dren," and the articles of Theodor Rothstein,1 to show that
the question of poverty among the working class is as yet a
much mooted question. The truth is that appearances, par-
ticularly the appearances of statistical figures in certain re-
ports, on which the revisionists mainly base their conten-
tions, are very deceptive.
To begin with, there are intentional deceptions in a good
many of our official statistics. As an illustration in point
may be taken a statistical report or abstract sent out recently
from the Bureau of Statistics in Washington. It was to the
effect that during the financial year closed June 30, 1906,
wages had increased one and a half per cent, in certain lead-
ing industries, whereas the cost of living had increased only
about one-half per cent. This report is false on its face, and •
it does not require long research to find its falsity. It is
1 Robert Hunter, Poverty. Macmillan, 1905. John Spargo, The Bitter
Cry of the Children. Macmillan, 1906. Theodor Rothstein, in Neue Zeit
(1906).
220 THE THEORETICAL SYSTEM OF KARL MARX.
plainly based on false premises. To mention only one point :
In estimating the cost of living the learned statistician based
his conclusions on the prices of certain staples. It is no-
torious, however, that these staples form only a small part
of the cost of living. In New York, for instance, from one-
quarter to one-third of the cost of living is paid as rent.
Rent has increased tremendously in New York during that
period. And yet the increase of rent is not included by the
learned statistician. Yet such intentional deceptions are of
little importance when compared with the unintentional de-
ceptions, owing to the deceptiveness of the facts themselves.
The comparative welfare of the working population of a
country is usually measured by the wages paid, where the
cost of living is the same. But the height of his wages are
by no means an index to a workingman's prosperity.
I shall not go into this question, however, now, for the rea-
son that, as the careful reader has undoubtedly observed,
Marx does not speak of the growth of the poverty of the
working class. The omission of any reference to poverty
is very significant in so careful a writer as Marx. This
alone would be sufficient warrant for us in assuming that
Marx did not consider the growing poverty of the working
class a necessary result of the evolution of capitalism, all
revisionist assertions to the contrary notwithstanding. Rut
Marx did not leave any room for speculation on the sub-
ject, for in another place in Capital he states clearly and
explicitly what he summarized here in a short sentence.
He says there:
"The law by which a constantly increasing quantity of moans
of production, thanks to the advance in the productiveness of
social labor, may be set in movement by a progressively dimin-
ishing expenditure of human power, this law, in a capitalist so-
ciety— where the laborer does not employ the means of produc-
tion, but the means of production employ the laborer — under-
goes a complete inversion and is expressed thus: the higher the
productiveness of labor, the greater is the pressure of the la-
borers on the means of employment, the more precarious, there-
THE PROLETARIAT AND THE REVOLUTION. 221
fore, becomes their condition of existence, viz., the sale of their
own labor-power for the increasing of another's wealth, or
for the self-expansion of capital. The fact that the means of
production, and the productiveness of labor, increase more rap-
idly than the productive population, expresses itself, therefore,
capitalistically in the inverse form that the laboring population
always increases more rapidly than the conditions under which
capital can employ this increase for its own self-expansion.
"We saw in part IV., when analyzing the production of rela-
tive surplus value : within the capitalist system all methods for
raising the social productiveness of labor are brought about at
the cost of the individual laborer; all means for the develop-
ment of production transform themselves into means of domi-
nation over, and exploitation of, the producers ; they mutilate
the laborer into a fragment of a man, degrade him to the level
of an appendage of a machine, destroy every remnant of charm
in his work and turn it into a hated toil; they estrange from
him the intellectual potentialities of the labor-process in the
same proportion as science is incorporated in it as an independ-
ent power ; they distort the conditions under which he works,
subject him during the labor-process to a despotism the more
hateful for its meanness ; they transform his life-time into
working-time, and drag his wife and child beneath the wheels
of the Juggernaut of capital. But all methods for the produc-
tion of surplus-value are at the same time methods of accumu-
lation; and every extension of accumulation becomes again a
means for the development of those methods. It follows there-
fore that in proportion as capital accumulates, the lot of the
laborer, be his payment high or low, must grow worse. The law,
finally, that always equilibrates the relative surplus-population,
or industrial reserve army, to the extent and energy of accumu-
lation, this law rivets the laborer to capital more firmly than
the wedges of Vulcan did Prometheus to the rock. It estab-
lishes an accumulation of misery, corresponding with accumu-
lation of capital. Accumulation of wealth at one pole is,
therefore, at the same time, accumulation of misery, agony of
toil, slavery, ignorance, brutality, mental- degradation, at the
opposite pole, i. e., on the side of the class that produces its own
product in the form of capital."
J
J
222 THE THEORETICAL SYSTEM OF KARL MARX.
This is perfectly plain: the lot of the laborer, his general
condition as a member of society, must grow worse with
the accumulation of capital, no matter whether his wages are
high or low. His poverty, in the ordinary sense of that
word, depends on the amount of wages he gets, but not his
social condition. And for two reasons. In the first place,
because the social condition of any man or class can only
be determined by a comparison with the' rest of the members
or classes of that society. It is not an absolute but a rela-
tive quantity. Even the question of poverty is a relative one
and changes from time to time with the change of circum-
stances. But the question of social condition can never be
determined except by a reference to the other classes of
society. This is decided not by the absolute amount of
worldly goods which the workingmen receive, but by the
relative share which they receive in all the worldly goods
possessed by society. Thus considered it will be found that
the gulf between the capitalist and the workingman is con-
stantly growing wider. This is admitted by all as an em-
pirical fact, and it has been proven by us in preceding chap-
ters as a matter of theory.
This circumstance, that the welfare or misery of the work-
ing class must be considered and determined with relation
to the wealth of society as a whole, and the share of the
different classes therein, has been pointed out by Kautsky
and Cunow. But Bernstein calls this " explaining away "
the Marxian statements in Pickwickian manner, and points
to the fact that Marx speaks also of " slavery, degradation,
and exploitation." We confess that we cannot see the in-
congruity which Bernstein seems to see here. But we do
see here once more how incapable Marx-critics are of grasp-
ing even comparatively simple points of Marxian theory.
Franz Oppenheimer raises the point of the growing " ex-
ploitation " of the working class in a theoretical way. Says
he: "Since Marx does not set a limit to the wages which
may be paid except the profit of the capitalists, nor the
depth to which the rate of profit of the capitalist may fall
THE PROLETARIAT AND THE REVOLUTION. 22$
except that it must permit the capitalist to accumulate,
it is quite possible that the wages should rise to such an ex-
tent that the rate of profit of the capitalist should fall from
say 10 to o.ooi per cent. In such an event" — he concludes
triumphantly what he evidently considers a great argument —
" ' exploitation ' would, of course, be of no practical im-
portance, and the necessity of an economic revolution would
be out of the question." One only marvels how a man of
ordinary intelligence, not to speak of such an undoubtedly
bright man like Oppenheimer, could have written down such
an absurdity. Oppenheimer seems to have been so much
impressed with the " fairness " of such a profit as the in-
finitesimal o.ooi per cent, that he forgot the little circum-
stance that in order that the rate of profit should fall to
such an extent, and capitalistic accumulation continue with
such a rate of profit, the amount of capital which a work-
ingman must be able to set in motion, and the surplus value
produced by him, must be so enormously large, that the " ex-
ploitation," as Marx understands the term, will not only be
of " practical " importance but will actually be very much
greater than it is with a 10 per cent, profit! This, by the
way, is an additional illustration of the oft-repeated truth
that, facts or figures in themselves are absolutely meaning-
less and get their meaning only from their relation to other
things.
The second, and chief reason, however, why the level of
wages received by the workingman does not determine his
social condition is that* the high level of his wages does not
in any way carry with it the security of his 'employment.
And by this is not merely meant the fact that the weekly
wages which a laborer receives is no index to his yearly
earnings, by which alone his real income can be measured.
Aside from this very important fact, which must always be
borne in mind, there is the still more important fact that,
no matter what the yearly income of the laborer is, the fact
that he does not earn it by steady employment at 1-52 part
of his yearly income, but by intermittent employment at
J
224 THE THEORETICAL SYSTEM OF KARL MARX.
irregular and never-to-be-foreseen intervals, has in itself
a determining influence on his social condition. It is this
fact that makes the means of production in the hands of the
capitalist a means of domination over the working class ; it is
this fact that turns the accumulation of capital into the ac-
cumulation of " oppression, slavery and degradation " on
the side of the working class. The insecurity of the labor-
er's employment is the secret of the power of the capitalist
class over the " free " workingman, it is the source of the
mental and moral degradation of the working class which
makes of them willing and obedient slaves, ready to kiss the
hand that chastises them. For it gives the capitalist a far
greater power over the life and liberty of the " free " work-
ingmen than was ever enjoyed either by feudal baron over
his serf or by the slave-holder over his chattel-slave.
That is also the secret of the great power of attraction and
the great social and cultural importance of the labor-union.
It is not the increase in wages which it may bring about
that makes it the great factor in the life of the working
class which it is. It is not for that that the great modern
battles between labor and capital are fought, no matter what
their ostensible purpose might be. It is the protection from
the grosser forms of arbitrariness on the part of the em-
ployer which it affords its members, thus increasing their
security of employment, that forms the essence of the labor
union; and it is for this that the great sacrifices are under-
gone by the workingman in fighting for the " recognition
of the union " or in the " sympathetic "strike," the two forms
of fight most odious to, and least understood by, our "eth-
ical " peacemakers between labor and capital, who would
secure to each its " proper rights." Going out from the as-
sumption that the workingman is nothing more than the
beast of burden into which capitalism strives to convert him,
they cannot understand why he should kick when the fodder
in his trough is left undiminished. But the workingman
knows instinctively the secret power of the chains which
keep him in bondage, and he tries to break them, or at least
THE PROLETARIAT AND THE REVOLUTION. 225
weaken them. He is not content to be converted into, or to
remain, a beast of burden; he wants to regain his moral
courage, his manhood; and he knows that this can only be
gained by organizing a social power which would do away
with or at least lessen the insecurity of his employment, the
source of his slavery. Hence his fight for the union as such,
which the good people cannot understand. But the capi-
talists understand it, hence their savage fight just at this
point. They will pay higher wages, and work their men
shorter hours, and grant a lot of other "just and reasonable
demands" if necessary, but they want no union, or at least
the open shop, for they want to remain " master of their *
own house." In other words, they are content to keep their
slaves a little better, but they will fight to the last ditch
against the tampering with the chains of slavery, against the
installing of moral courage, the fostering of the spirit of
manhood in their slaves.
This struggle between capital and labor is the other side
of the shield which Marx has described. It is the growing
revolt of the working class which, as Marx says, is disci-
plined, united, and organized by the very mechanism of the
process of capitalist production itself. This is not an inde-
pendent process working independently of the so-called " im-
poverishment " or, rather, increased-exploitation process
which we have described before, as some Revisionists seem
to think, but, on the contrary, accompanies it, and is partly
its result. Nor is its effect necessarily or even usually such
as to counteract the effects of the first process, as some other
Revisionists, notably Rudolf Goldscheid, the latest writer
on this subject, think. While the growth of the discipline,-
union and organization may do away with a good deal of the
poverty of the working class by forcing higher wages and!
better conditions of labor, and would therefore have thd
tendency of suspending in whole or in part the " impoverish-
ment" tendency of capitalistic accumulation, as that term
is used by the Marx critics, it can have no such effect on\\
the tendencies described by Marx. That is to say, it cannot J
226 THE THEORETICAL SYSTEM OF KARL MARX.
have the effect of removing the causes of the enslavement
process; it cannot secure employment for the working class;
it cannot suspend the operation of the economic laws which
create an over-population, a reserve army, although it can
organize rationally the distribution of the employment that
there is, thereby palliating somewhat the sharpness of the
economic process. But it can counteract the results of the
economic process on the psychology of the working class.
In the breast of the slave who is riveted to his master capi-
tal there still may develop the spirit of a free man and the
courage to fight for freedom. The discipline, union, and
organization of the working class cannot give him any *ree-
dom under capitalism because the economic conditions en-
slave him to capital, but they enable him to fight for some
liberties while in slavery and for better conditions of servi-
tude. This fight, however, in itself develops the desire for
ultimate freedom and educates the workingman to an under-
standing of the causes and the conditions of the struggle,
thus making of him an active and intelligent opponent of the
present order. At the same time the struggle must be grow-
ing more intense as time passes on. For the fight only
affecting the results of the downward tendency, and being
powerless to remove its cause, whatever gains are made can-
not be kept unless the fight for them is kept up, and the
fight must be intensified as the tendency increases. Hence
the growing revolt of the working class of which Marx
speaks. Hence, also, the absurdity of the passage quoted
below from Rudolf Goldschied's very recent booklet: "Im-
poverishment or Amelioration Theory?" which forms a new
departure in Revisionism. This latest manifestation of Re-
visionism is in effect an admission of the fiasco of the old-
style Revisionism, and proceeds in different manner. But
only the form has changed; the substance, however, remained
the same. Particularly the metaphysical way of looking
at things from their formal, stagnant, so to say, separatist,
point of view, and the failure to sec the inner connection
between them while in motion. So says Goldscheid:
THE PROLETARIAT AND THE REVOLUTION. 227
" First of all there can be no doubt that, no matter how much
alike the purely economic tendencies and the psychological
counter-tendencies evoked by them may be in forcing the devel-
opment toward socialism, there still exists a certain antagonism
between them. It is quite possible, for instance, that during
long periods of time the psychological counter-tendencies may
not be strong enough to exert any considerable influence on the
purely economic tendencies, the concentration of industrial un-
dertakings, the accumulation of capital, and the impoverishment
of the masses. Where the circumstances have thus shaped
themselves the hope for socialism lies principally in the economic
tendencies. It is different, however, where the purely economic
process has an equally strong psychological process to counter-
balance it. There the growing accumulation of capital in the
hands of the capitalist class will be accompanied by the grow-
ing political and economic power of the working class. And
this growing political and economic power of the working class
will manifest itself by checking more or less effectively the
purely economic process of concentration and especially the
process of impoverishment. Whoever, therefore, desires to up-
hold the Marxian theory of concentration and accumulation 'to
its full extent in the face of the daily power of the organized
proletariat, does not realize that he has undertaken a quite
hopeless task : For he asserts that the purely economic tendency
of the capitalistic mode of production necessarily produces psy-
chological counter-tendencies, and at the same time denies to
these psychological counter-tendencies any real influence. It
is therefore evidently very unwise in the socialist theoreticians
to continue to expect the expropriation of the capitalists through
the independent action of the inherent laws of capitalist produc-
tion. On the contrary, the psychological counter-tendencies must
paralyze the purely economic process with increased vigor and
with the force of a natural law ; that is to say, the breakdown
of the capitalist system by its own weight must be steadily re-
moved further and further from the realms of possibility."
The question of the breakdown of capitalism will be
treated later, as already stated. But we want to point out
here in addition to what we have already said, the dualism of
the conception which regards the economic conditions and
228 THE THEORETICAL SYSTEM OF KARL MARX.
the psychological effects which these conditions produce
upon the workingman, as two independent motive powers,
working not only without each other but neutralizing each
other; the inability to grasp the process in its entirety and in
its oneness, to see the monism of the process.
We also want to call attention here to the fact that the
learned Marx critics who insist that by accumulation of mis-
ery as one of the tendencies of capitalistic accumulation,
Marx meant the accumulation of poverty, and then try to
disprove such tendency by pointing to the supposed amelio-
rated condition of the working class, fail to take into account
the fact that whatever amelioration there is was brought
about by the struggles of organized labor, which Marx also
predicted. The present condition of the working class is not
merely the result of the tendencies of capitalistic accumula-
tion, but of the tendencies of capitalist accumulation as modi-
fied by the struggle of organized labor against them. So
much for Marx's proper prognosis of the tendencies of capi-
ta'lism. As to the effect of amelioration on the evolution
to socialism, such amelioration, if any there be, would only
be significant if Marx had expected the advent of socialism
from a net result of poverty; that is, if there were some-
thing in poverty itself which were favorable to socialism,
an idea which no Revisionist has so far ascribed to Marx.
I hit as we have sc-cn, it is this very struggle for amelioration,
no matter what its immediate result during the progress of
the struggle, that is the most important factor from the
Marxian point of view in the final overthrow of capitalism,
in so far as the active force which is to do the work is
concerned.
'c the spirit of revolt is growing and maturing in the
working class this class evolves a new ideology. Living jn
constant struggle with the capitalist class and capitalist in"
stitutions which must array themselves in the stru i; L; !
the part of the capitalist class, the workingman learn
hate these institutions and the whole ideology
^talist class. Being thrown on his own resources, he begins
THE PROLETARIAT AND THE REVOLUTION. 22Q
to think for himself, to form his own ideology. But every /
ideology Inust have its base in the material conditions under
which it is formed. The new ideology is based on and is the x^/
reflection of the new economic forces, the socialized means,
modes and methods of production and distribution, and the
growing collective control over them. His ideology is col-
lectivism. In forming his ideology he is aided, on the one
hand, by the very form of his struggle against the old order,
which is the collective mass struggle, and the benefits derived
therefrom which can only be enjoyed while acting collect-
ively and when organized in accordance with collective
principles, and the well organized and developed demo-
cratic forms of government and activity; and on the other
hand, by the dissolution of the old ideology in general,
and in particular by its abandonment by the middle class,
the class with which the working class comes into closest
contact.
At the same time the working class is steadily advancing
in economic power and independence in the sense that it
takes possession of more and more responsible positions in
the economic life of the nation, diverts to itself, by means
of the corporation and otherwise, all the growth of the
concentration and centralization of capital; and particu-
larly with the development of the corporate form of
economic activity, the capitalist class abdicates its func-
tions, the proper functions of a ruling class, those of eco-
nomic management, into the hands of the working class.
The working class thus not only becomes revolutionary in
its ideas, desires and aspirations, but it has the organised
power to carry the revolution into effect, and is fully
equipped to take hold of all social and economic activities
and functions the day after the revolution, and carry them
'~*n successfully.
J
CHAPTER X.
THE SOCIAL REVOLUTION.
We are now at the central point of Revisionism, the
point from which everything else in the theories of the
Revisionists radiates and to which everything in their argu-
ments gravitates. The casus belli which moves all their
hosts — the Social Revolution. The red flag of the social
revolution is the red cloth the sight of which none of them
can bear. Whatever their disagreements, and they are not
few, they are all agreed that the social revolution wouldn't,
shouldn't and couldn't come. Struve proves it philo-
sophically, Tugan-Baranowsky proves it economico-mathe-
matically, Oppenheimer proves it sociologically. Bernstein
proves it by a composite method which cannot easily be
classified, and the rest of them in any old way.
What is this social revolution which has thus aroused
them? It is not, of course, the fact of the change from
the capitalist to the socialist order. They all, or almost
all, believe in that, in some form or other. It is the par-
ticular form or manner in which it is to come about, ac-
cording to the Marxian teaching, to which they object. It
is the implication of the suddenness of the change, and the
violent manner in which it will be brought about as the cul-
mination of a struggle, that arouses their opposition. The
change could, should and would come in all imaginable
ways, but none of them will be sudden or violent. For
they are all violently opposed to violence. And not only
physical violence, but any kind of violence or disturbance.
Therefore, socialism will come, according to their notion,
as a gradual enlargement or a gradual diminution of capi-
THE SOCIAL REVOLUTION. 23!
talism, but never as an overthrow, more or less sudden, . ff
more or less violent, physical, social or economic, as Marx ^
imagined it.
Marx says that the centralization of the means of pro~
duction and socialization of labor at last reach a point
where they become incompatible with their capitalist shell,
This shell is burst asunder. The knell of capitalist private
property sounds. " The expropriators are expropriated."
This, says Struve, is too sudden, and is philosophically
quite impossible. There is no philosophic way in which
the sudden transformation of one social order into another
could be explained, no logical method by which it could
be reasoned out. Hence it could not take place. " The
continuity of every change, even the most radical, is a
necessary cognito-theoretic and psychological postulate of
its comprehension. The evolutionary principle takes a po-
sition analogous to the law of causation : it is a universally
valid form in which we must picture to ourselves the radi-
cal changes of things in order to comprehend them. Of the
content and the causality of the change the evolutionary
principle tells us nothing: it only gives us its form, and
this form is — continuity. The old maxim: natura non
facit saltus should, accordingly, be changed into: intellectus
non potitur saltus" x All of which may or may not be true.
We are not sufficiently concerned in the subject to undertake
to decide that question here. For ourselves we hope it is
not true, but if it be true, let the theories of cognition and
psychology look out for themselves. The maxim: natura
non facit saltus, in so far as it is still part of our scien-
tific apparatus, simply means that nothing happens with-
out any cause, but when there is sufficient cause therefor
nature does leap. As a matter of fact sudden leaps are
almost as frequent in nature as are slow changes, and the
figure used by Marx, that of a bursting >shell, may be con-
sidered its most common and most perfect example. Fur-
1 Peter von Struve, Die Marx'sche Theorie der sozialen Entwicklung.
In Archiv fur Soziale Gesetzgebung und Statistik (1899).
232 THE THEORETICAL SYSTEM OF KARL MARX.
thermore, it does not in any way interfere with the evo-
lutionary principle, to which Struve does, in our opinion,
great injustice by reducing it in reality to mere slowness,
for such violent leaps as the bursting of shells do not by
any means interfere with the continuity of the process, as
Struve seems to think. On the contrary these violent leaps
are part of the evolutionary process and constitute its cul-
minating point, as well as the starting point for a renewal
of this process, in all higher forms of life. The natural
sequence of events being such, a theory of cognition must
be able to explain it to our comprehension, and to say that
some theory which styles itself a theory of cognition can-
not do that is simply another way of saying that it is not
a theory of cognition.
Another " philosophical " objection which StruVe ad-
vances is supposed to be based on the Materialistic Con-
ception of History, which he feels himself called upon to
protect against Marx. According to the Materialistic Con-
ception of History, says Struve, it is impossible that the
legal forms which make up the social system should be-
come so entirely incompatible or antagonistic to the forms
of production as to cause a breaking up of the whole sys-
tem. For, that theory, properly understood, requires that
the legal forms should continually adjust themselves to the
material conditions, as they change, and it would be an in-
fringement on the power of the economic forces to sup-
pose that they should not change the legal forms as they
go along. We shall not enter here into a long discussion
to prove that Struve has not " properly understood " the
Materialistic Conception of History. We will simply say
that if Struve has understood it properly then the Material-
istic Conception of History is sadly in the wrong. For the
fact, of which there is abundant historical proof, is, that
legal forms become quite antagonistic and absolutely in-
compatible with economic conditions and that very serious
and violent disturbances result therefrom. No amount of
reverence for the " economic factor " can blind us to the
THE SOCIAL REVOLUTION. 233
sad truth, that that much-abused worthy is not quite as all-
powerful as some of his would-be admirers would have us
believe, or, at any rate, that his influence 'is not quite as
direct, and therefore does not work quite as smoothly, as
they imagine. Besides, in his touching care for the Ma-
terialistic Conception of History, Struve has entirely for-
gotten the fact that, according to Marx, the economic con-
ditions of the capitalist system are themselves a mass of
contradictions, and could not therefore result in a smoothly
working legal or political system.
It was evidently with the intention of eliminating some of
the absurdities which the purely philosophic opponents of
the Social Revolution had to resort to in their argument,
that Rudolph Goldscheid constructed his theory of the so-
called " Sociological Wave." This theory is quite cleverly
constructed, and is evidently designed to present an argu-
ment against the possibility of the social revolution, with-
out the use of some of the grosser errors of his prede-
cessors. This theory recognizes most of the Marxian prem-
ises, and therefore sounds plausible. It consists in this:
The tendency of the accumulation of capital is, as Marx
says, towards increasing the misery of the working-class.
At the same time this accumulation has also the tendency
to organize the working-class, as Marx has also clearly
stated. This results in a struggle between organized labor
and the capitalists, the class struggle on which Marx lays
so much stress. In this struggle, the fortunes of war al-
ternate, giving victory now to the one side and now to the
other. When the tendency of capitalistic accumulation has
gone very far in reducing the condition of the working-
class, this engenders the revolutionary feeling of the prole-
tariat, who put up a strenuous fight until they gain a vic-
tory substantially bettering their condition, usually putting
them on a higher plane than they ever were before. This
better condition lasts for some time until the .capitalists,
driven to it by the lash of competition, turn on the. screws
and attempt to enforce the, tendency of capitalistic accumula-
234 THE THEORETICAL SYSTEM OF KARL MARX.
tion and reduce the condition of the workingmen to their
former level. In this they succeed only partly, for when
the workingmen have reached a higher level of well-being
they utilize it to strengthen their organization, obtain more
knowledge and intelligence, and the spirit of revolt is
aroused in them long before the former low level of their
estate is reached. Their resistance is intensified, and the
fight on their part does not slacken until they reach not
only the high level which they formerly occupied but until
they make new conquests, placing themselves on heights
never yet before reached. This they are enabled to do
because the spirit of revolt which is aroused in them by the
pressure of economic tendencies succeeds in constantly lim-
iting and checking the economic process ^and diverting it
from its natural course. So that " the social evolution
moves in a wave-like course, which has this peculiarity:
No matter what relation the hill and dale may have to each
other, the crest of each succeeding wave reaches, as a rule,
a higher level than any preceding one." The waves will
finally run so high that their crests will reach into social-
ism : the prospect of a social revolution is successfully ban-
ished.
The whole thing sounds so plausible, the argument so
much Marxian, and the picture of the rising waves is so
beautiful, that one is almost tempted to overlook the fact
that there is absolutely no warrant in the whole argument
for the assumption so unceremoniously made that the spirit
of revolt engendered in the working class by the hardships
and misery of capitalistic accumulation succeeds in con-
stantly limiting and checking the economic process while
the capitalist system lasts. And yet it is on this assumption
that the whole thing rests ! With this assumption out,
the whole argument against the social revolution as Marx
conceived it, with bursting of shell and all, falls to the
ground. We arc not disposed to quarrel with the author of
the " sociological wave " in so far as the same does not put
forward any higher pretensions than to give us a descrip-
THE SOCIAL REVOLUTION. 2$5
tion of the bettering of the condition of the working-class
under capitalism in so far as the same is possible under
the laws governing capitalist production and accumulation.
That is to say in so far as it affects the question of the
impoverishment of the working-class. And in so far it does
not in any way contradict the Marxian theory. It is quite
different, however, when it comes to the abolition or limit-
ing of the economic laws by "psychological tendencies"
in the peaceful movement of the " sociological wave." Be-
fore we can accept his statements we must carefully ex-
amine into the question whether the tendencies of modern
development do or do not limit the laws of capitalist pro-
duction and accumulation, and if they do whether such
limitations can abolish the whole capitalist system by de-
grees and transform it into a socialist system without the
bursting of any shells. This brings us back to the purely
economic question of the possibilities of capitalistic devel-
opment, and the theories of the " expansion," " adapta-
tion " and " adjustment " of capitalism brought forward by
the Revisionists.
In an earlier chapter of this work we discussed at length
the economic contradictions of the capitalist system. We
concluded our examination with the statement that the
great problem of capitalist economics is the disposition of
the surplus-product created continually under that system.
It is the inability to dispose of that product that is the chief
cause of the temporary disturbances within its bowels, and
which will lead to its final breakdown and replacement by
the socialist mode of production and distribution.
The Revisionists with Bernstein at their head question
the correctness of these conclusions, both as regards the
crises within the capitalist system as well as with regard
to its ultimate breakdown. Bernstein has nothing definite
to say as to the cause of economic crises in the capitalist
system, except to inform us that much could be said and
has been said on either side, and that people who are inter-
ested in analogies might find very interesting analogies
236 THE THEORETICAL SYSTEM OF KARL MARX.
between the theories on this subject and some- other inter-
esting subject. As to the Marxian theory of crises Bern-
stein has again nothing more definite or instructive to say
except that Marx, as usual, contradicts himself in the most
flagrant manner, and that the explanation of this contra-
diction is to be found, again as usual, in the fact that, as
is very usual, and, indeed, unavoidable, some time has
elapsed between the writing of the contradictory passages.
The only unusual thing about this very enlightening in-
formation is the correct statement that the passage con-
tained in the earlier volumes was written much later than
that contained in the third volume; a statement which must
confound his friends who have been writing very learned dis-
quisitions on the development of the Marxian theory, based
on the contradictions between the earlier and later volumes
of Capital, which were to be explained by the fact that
the third volume was the fruit of Marx's later and riper
judgment. As to the subject-matter itself the reader is
left absolutely in the dark as to what either the Marxian
or the Bernsteinian theory of crises (if there be such)
may be. It is very evident, however, from what he does
say that he is himself very much in the dark on the sub-
ject. This does not prevent him, however, any more than
a similar groping in the dark prevents his friends, from
giving instruction on the subject, and from revising a the-
ory which he does not understand.
The sum and substance of the argument against the
Marxian conception of the tendencies of capitalist economic
development put forward by Revisionism, amounts to this:
The contradictions observed by Marx are not inherent in
capitalism, as Marx supposed, but are merely connected
with, and are the result of, a certain form of capitalism,
to wit: capitalism in its early stages, when private enter-
prise with its resultant anarchy of production were pre-
dominant. As soon, however, as the anarchy will be elimi-
nated from capitalistic production, and that anarchy will be
eliminated by the organization and systematization of pro-
THE SOCIAL REVOLUTION. £37
duction through the modern trusts and other industrial
combinations, crises will be abolished, particularly in view
of the apparently boundless possibilities of the expansion
of capitalist markets by the aid of modern imperialism.
And as the final breakdown of capitalism, or social revo-
lution, is nothing more than a big crisis, the possible danger
of a revolution is averted the moment the cause of crises
is removed. The basis of fact for this argument is fur-
nished by the circumstance that the law of the periodical
recurrence of economic crises insisted on by Marx was
apparently broken through by the modern trusts with the
aid of Imperialism, and the crisis which was due at about
the beginning of this Century was successfully kept out by
them.
Before proceeding any further we shall have to examine
the Marxian theory of crises, and the connection in which
crises within the capitalist system stand to the ultimate
breakdown of the system as a whole, and then examine the
facts of the latest developments of capitalism as to their
bearings on each.
According to Marx there are two distinct causes of
crises: One is the separation of the act of exchange of
commodities into two separate acts, the exchange of com-
modity A for money and then the exchange of that money
for commodity B, by the introduction of money as the
universal commodity and general repository of exchange-
value. By dividing the act of exchange into two separate
and independent acts, disconnected in point of time, the
possibility of crises is given. For, should the interval be-
tween the two acts be too long the wheels of production
will stop, the market will become overloaded with goods,
and a crisis will result. This possibility turns into a proba-
bility because of the peculiar character of money as the
universal commodity and special repository of exchange-
value which makes it a very much coveted good, as it is
only in that form that value is realized and remains real.
Of course, capital is anxious to fulfil its function, the ere-
238 THE THEORETICAL SYSTEM OF KARL MARX.
ation of surplus-value, and in its anxiety to create surplus-
value it takes the risk of having the value crystallized in
itself transformed into such form where the value realized
in it may again be called into question and be partly lost.
But with all that capital is essentially cowardly, and the
least disturbance frightens it and makes it withdraw into
its shell. And a disturbance arises each time there is a
disproportion of production, which is a common occur-
rence under our system of private production and com-
petition. This probability, again, is intensified by our
credit system, which on the one hand makes capital ex-
tremely sensitive to disturbances and increases its natural
cowardice, and on the other opens up great vistas of gain
by speculation and jobbery through panics and crises.
Such crises, that is crises chargeable to the circulation
process of commodities, are of course due to the " anarchy
of production," and will disappear with the disappearance
of that anarchy, assuming that the latter may disappear
while the capitalist system lasts. Assuming therefore that
the trusts and industrial combinations can abolish this
anarchy and regulate production, the Revisionists are quite
right in asserting that no commercial crisis will occur again
on that account. Their mistake lies in assuming that the
" anarchy of production " is, according to Marx, the only
cause of commercial crises. As a matter of fact the cause
mentioned by us above is not only not the only, but not even
the chief cause of crises according to Marx. This could
be determined as a mere matter of logic, that method of
determining economic and sociological questions which is
so dear to the heart of some Revisionists. For, the
" anarchy of production," in its very nature and essence
an irregular factor, could not possibly be the cause of regu-
larly recurring crises. But Marx does not leave any room
for doubt to what is, in his opinion, the chief cause of crises
under capitalism.
This cause is the inherent contradiction of that system
which we have already pointed out before, the dual posi-
THE SOCIAL REVOLUTION. 239
tion of the laborer as a seller of his labor-power and a pur-
chaser of the products of his labor-power, and the creation
of a surplus-product flowing therefrom which must result
in an over-production of commodities quite apart from the
" anarchy of production." It is to this constant factor, the
constantly accumulating surplus-product, that the constancy
with which crises recur is due. It is to this that the indus-
trial cycle, the periodical recurrence of prosperity and stag-
nation, is due. And this recurrence of prosperity and
stagnation, that is to say, the inability to continually carry
on production on that plane which the productive forces of
society permit and require, is the foundation of the Marxian
theory of crises. The fact, therefore, pointed to by Re-
visionists, that, as Tugan-Baranowsky has shown in his
History of Commercial Crises in England, the cycle has
now assumed another form, that instead of feverish ac-
tivity preparing the way for a sudden crash there is now
a gradual tide and ebb of prosperity and stagnation, is not
a refutation of Marx but a confirmation of the correctness
of his analysis of capitalistic production. This fact, which
is ascribed to the regulative influence of the modern trusts
and combinations, proves conclusively that neither trusts
and combinations nor any other regulative influence can
abolish crises, because it cannot abolish the chief cause of
crises — overproduction, which does not depend on the lack
of regulation of production but is inherent in the capitalistic
mode of production. Trusts and combinations, if they can
do anything at all, can only affect the form which the crises
may assume, whether they should be short and acute as
formerly or mild and long-drawn-out as now, but no more.
This is acknowledged even by Tugan-Baranowsky him-
self.
Some Marx-critics seem to derive some comfort from the
fact that, owing to the regulative influence of modern in-
dustrial combinations, crises have ceased to be as acute
as formerly. We fail to see wherein a long period of
stagnation is any better than an acute cf isis. That is,
240 THE THEORETICAL SYSTEM OF KARL MARX.
from the workingman's point of view. As Tugan-Baran-
owsky himself points out, the change in the character of the
industrial cycle has benefited only the capitalist class, and
the position of the working class has become much worse
for it.
Of course the chief reason for their exultation over this
change, or at least that of some of them, is their belief that
the doing away with the acuteness of crises does away
with the possibility of the occurrence of the great and
final crisis, the social revolution, which they cannot
imagine otherwise than as a sudden crash. But this cata-
clysmic conception of the breakdown of capitalism is not
part of the Marxian theory, and has, at any rate, nothing
to do with his theory of crises. The disappearance of the
acuteness of commercial crises does not in any way affect
their revolutionary influence, if their influence be necessary
for the coming of the social revolution. For the remedy
is worse than the disease as far as its influence on the con-
dition of the working class is concerned, except, of course,
to the minds of those who imagine the great revolution as
the work of a hungry and desperate mob driven to dis-
traction and destruction by the immediate lack of work,
food and shelter. The mildness of the change from one
phase of the industrial cycle to the other does not le
the mass of misery produced by it, nor does it indi
any lessening of the contradictions of the capitalist sy
of production; it does not therefore affect the probabilities
of a social revolution, except if we imagine it as a sudden
cessation of all economic activity. The real question
therefore is, not whether crises have become less acute in
form but whether the economic contradictions which pro-
duce them have lost any of their acuteness. This briiu;
to the question of the adaptability and cxpansivcncss of the
capitalist system of production.
That capitalism has obtained a new lease of life by em-
barking on the sea of Imperialism is assured by the Re-
visionists, although none of them ever attempted to care-
THE SOCIAL REVOLUTION. 24!
fully examine into the question in order to ascertain
whether there was any basis of fact for such assumption,
and if the assumption was correct how long such new lease
would last. Bernstein declines at the decisive moment to
commit himself. True to his nihilistic-opportunistic in-
stinct he leaves the question an open one, which does not,
however, prevent him and his friends from holding lan-
guage as if they had squarely met the issue and settled it.
A careful examination of the question will show, how-
ever, that, both as a matter of abstract reasoning and as a
matter of concrete fact, Imperialism cannot save the capi-
talist system, although it undoubtedly may prolong its ex- /
istence. If the Marxian analysis of the capitalist system
of production is correct, and that system does suffer with
the inherent malady of ever increasing overproduction be-
cause of the ever increasing diminution of the share of
the workingman in the product of his labor, then it follows
as a logical conclusion that the mere extension of that sys-
tem to new fields cannot save it, for the system would then
carry with it its fatal malady to these new fields. And
it is to a mere extension of the capitalist system that Im-
perialism reduces itself in the last analysis. For it must
be remembered that capitalism cannot open a new^ market
for its products without making the new territory part of
its own system of production. It is the curse of capitalism
that by the very processes with which it creates its new
customers for its goods it makes of them competitors in
the business of producing these goods. Therein lies the
difference between the old and the new forms of coloniza-
tion. That is why colonial dependencies, colonial empires
in the old sense of the word, are no longer possible, except
as a temporary and passing stage. Of course while this
stage lasts it is of some relief to the mother country suf-
fering from being heavy with surplus-product. But the
infant colonies grow very rapidly, and with the ripening
age of capitalism the offspring develop marvelous pre-
242 THE THEORETICAL SYSTEM OF KARL MARX.
cociousness, and soon serve only to " extend " the serious-
ness of the situation.
The facts verify this reasoning. But before examining
the facts we must again pay our respects to that bright
light of anti-Marxian economic literature whom we have
already had occasion to mention before — Prof. Tugan-
Baranowsky. With that insight of the true scholar which
so favorably distinguishes him from the rest of the Re-
visionist host he saw that the Marxian theory cannot be
overthrown by such indefinite and meaningless talk as that
of " adaption," " extension," or " expansion." That the
Marxian theoretical edifice is too solidly built and is too
finished a structure to be vulnerable to such mode of at-
tack. That it can be successfully attacked, if at all, only
at its foundation and only by using the methods employed
in its construction. He therefore attempts to show by an
analysis of capitalistic production that the Marxian con-
clusion of a necessary over-production does not follow.
The result of his efforts is a theory of " distribution " of
production, according to which if production is " regu-
lated " in such a way as to always produce a certain, ever
increasing, share of the total yearly product in the form
of " means of production," then no over-production will
ever occur. I have somewhere else shown that this theory
is an utter absurdity. But nevertheless it cannot be de-
nied that this theory is the only scholarly attempt on the
part of any Revisionist to disprove the Marxian theory of
crises and over-production. That Tugan-Baranowsky failed
in his attempt was not his fault, but his fate. And the
fact that the theory so laboriously constructed by him is
sheer nonsense makes his fate the more tragical. For
Tugan-Baranowsky is not only an acute theoretician but
also a keen observer of the facts of life. But, as I have
stated somewhere else, he suffers with the malady of his
age : a sickly yearning for the " ethical," and a hysterical
hunt for the " practical." The yearning for the " ethical "
drove him away from the " unethical " Marxian system.
THE SOCIAL REVOLUTION. 243
and, left to drift without the sure guidance of an all em-
bracing theory, he clings to the isolated facts of existence
which obtrude themselves upon his keen vision.
The facts upon which Tugan-Baranowsky constructs his
theory are the same facts to which we alluded above as
confirming our theory. They are: that the area of capital-
ism expands, and that production, in so far as the goods
produced are concerned, has so changed that the principal
goods produced now by the leading capitalist countries are
machinery and other " means of production," instead of
consumable goods as was formerly the case. From these
two facts Tugan-Baranowsky concludes that it is a law of
capitalistic development that the quota of consumable goods
in the yearly product of society should constantly grow
smaller and the quota of " means of production " as con-
stantly increase; and that if the proper proportion is al-
ways observed no over-production can ever occur.
Is this conclusion correct ? Most emphatically, no !
Tugan-Baranowsky sees the immense masses of " means
of production " produced annually by the leading capitalist
countries, and he stands in awe of this great fact. A little
less respect for " fact " and a little more respect for theory
would have made him ask for the why and the wherefore.
It would also have made him look for the connection be-
tween this fact and other facts. And first of all he would
have taken notice of what was being done with these
"means of production." Had he done so he would have
observed that these immense masses of " means of pro-
duction," with some exceptions which will be noted later,
are not used in the capitalistic countries in which they are
produced. They are produced in the capitalistic countries
and exported into countries which are only in the process
of capitalisation, so to speak. He would then have under-
stood that the surplus-product in capitalistic"* countries has
so far not clogged the wheels of production permanently,
not because of the clever distribution of production into the
different spheres, not because of the change from the pro-
244 THE THEORETICAL SYSTEM OF KARL MARX.
duction of consumable goods to the production of " means
of production," but because the capitalistic countries have
so far, owing to the fact that some have developed capi-
talistically earlier than others, and there still remain capi-
talistically undeveloped countries, had an outside world
into which they could dump the products which they could
not themselves absorb, whether those products be cotton
or iron goods. This does not, by any means, mean that the
change from cotton to iron goods, as the leading product
of the foremost capitalistic countries, is of no significance.
On the contrary, it is of the greatest importance. But its
significance is entirely different from that ascribed to it by
Tugan-Baranowsky. It shows the beginning of the end of
capitalism. As long as the capitalist countries exported
goods for consumption there was hope for capitalism, within
those countries. There was no telling, then, how great the
capacity of the non-capitalistic outside world for the con-
sumption of capitalistically produced goods would be, nor
how long it would last. The growth of machinery in the
export from the foremost capitalistic countries at the ex-
pense of consumption-goods shows that spheres which
were formerly outside of capitalism, and therefore served
as a dumping-ground for its surplus-product, are drawn
into the world of capitalism. That as their own capitalism
develops they produce their own consumption-goods. Now
that they are in the initial stages of their capitalistic devel-
opment, they need the capitalistically produced machinery.
But soon they will not need this either. They will produce
their own iron-goods just as they now produce their own
cotton or other consumption-goods. Then they will not
only cease to be a receptacle for the surplus-product of
the now only capitalistic countries, but they will produce
a surplus product of their own which they will find it hard
to dispose of.
There are other things which Tugan-Baranowsky might
have observed had his vision not been obstructed by the
details of capitalistic practice. Things, the observation of
THE SOCIAL REVOLUTION. . 245
which would have given him a glimpse of the " true in-
wardness " of the latest phase of capitalistic development.
He would have noticed, for instance, that a tremendous
amount of the " means of production " which are produced
in capitalistic countries and are not directly exported, is
used within those countries in such a manner, that is, in
effect, equal to export. Such are the building of trans-
continental railroads, interoceanic canals, and steamship
lines designed to serve as an incident to the export of
products from capitalism into the non-capitalistic or half-
capitalistic world. Furthermore, in so far even as such
" public improvements " are used wholly within the limits
of capitalism (and a tremendous amount of the " means of
production" is used for such purposes), they have the pe-
culiar effect of removing large quantities of surplus-product
from the market, at least temporarily. It is the peculiar
nature of such means of production that their usefulness
or uselessness can not be definitely ascertained until fully
completed and operated for some time. The result is that
immense masses of such " means of production " are con-
stantly produced without any actual necessity therefor, and
often for purely speculative purposes. While these
" means of production " are being produced, and it takes
years to complete them, the wheels of capitalistic pro-
duction revolve merrily, without hitch or stop, notwith-
standing the fact that the work may be absolutely useless
in whole or in part, and that the value supposed to be cre-
ated in their production, or at least a large part thereof,
will never be realized. The wiseacres of capitalism, like
Tugan-Baranowsky, listen to the siren-song of these mer-
rily revolving wheels, and draw in their imagination allur-
ing pictures of the endlessness of capitalism wound around
an endless chain of " means of production." Of course,
there is bound to come a rude awakening. vThe production
of these particular " means of production " turns out to be
the merest waste. But that is another story
In order to appreciate the importance of this point (and
246 THE THEORETICAL SYSTEM OF KARL MARX.
this point applies equally to " means of production " of this
nature, whether used within the limits of capitalism, or
exported for use outside of it), we need only refer to Tu-
gan-Baranowsky's own " History of Crises in England."
The facts brought together in that book, in so far as they
relate to the latest phase of capitalism, that now under
consideration, teach a remarkable lesson. This lesson can
not be missed by one who contemplates the whole picture
there represented, but could not be learned by Tugan-
Baranowsky, who saw only the details of the process by him
described. His theory of the " distribution of production "
is the result of his having missed the great lesson which
that book teaches, and that is, that THE CAPITALIST SYSTEM
LIVES AND THRIVES BY WASTE.
In speaking of the first "modern" crisis, that of 1857,
Tugan-Baranowsky says in his History of Crises: — "The
peculiarities of the crisis of 1857 find their explanation in
the world-character of that crisis The char-
acteristic difference between the crisis of 1857 and those
of 1825 and 1836 consisted also in the fact that this crisis
fell most heavily not on the cotton industry as the former
ones but on the iron industry. In this the new feature of
the capitalistic mode of production found its expression, —
the increased importance of the part played by means of
production on the world-market as well as in economic
life generally. The stagnation of trade usually moves the
industrialists to look for new markets for the disposition
of their goods. In this respect the crisis of 1857 had a
very strong effect. The exports from England to the
United States fell from nineteen million pounds sterling
(1857) to fourteen millions (1858); the exports from Kng-
land to the East Indies, on the other hand, rose from 11.7
millions pounds (1857) to 16.8 millions pounds (1858).
In order to recuperate from the blows which it received on
the European and American markets English capital mi-
grated to Asia. In the East Indies began an epoch of rail-
road building, and of the improvement of inland ways of
THE SOCIAL REVOLUTION. 247
communication, which had the effect of increasing there
the demand for English goods."
We can not repeat here the detailed statement of the
crises that followed that of 1857 until the present day, but
a careful examination of this very interesting part of Tugan-
Baranowsky's book will prove very instructive. Briefly
stated, all these crises were brought about by over-produc-
tion of " means of production," particularly of the most
lasting and staple means of production, those which it
takes longest to produce, means of communication and pub-
lic improvements. The typical crisis occurs in about the
following manner:
The starting-point is the preceding crisis. As Tugan-Ba-
ranowsky says in the passage just quoted : " The stagnation
of trade usually moves the industrialists to look for new mar-
kets for the disposition of their goods." And as he has
also observed, these goods consist mostly of means of pro-
duction. In other words: after a crisis there is a super-
abundance of capital which is seeking employment. As the
ordinary fields of occupation, particularly at home, are well
filled, the capitalists look for some new fields wherein their
capital could be profitably employed. Knowing that it
would be useless to manufacture some new consumption-
goods, or some machine for the purpose of manufacturing
such goods, for the reason that the capacity of our society
for consumption is limited, they start out to create new de-
mands by creating new civilization. Civilization has proved
a good customer, and capitalists turn to it instinctively
whenever hard pressed. So the iron threads of civilization
begin spinning at home and abroad, but mostly abroad, the
missionary spirit of capitalism being well known. This
creates a demand for vast amounts of capital and labor.
Things begin to hum, — the prospects are bright. The
markets are relieved of the surplus-product which clogged
the wheels of production, and trade has revived. An era
of prosperity has set in. The more crazy the " civilizing "
undertaking, particularly the longer it takes to finish it,
248 THE THEORETICAL SYSTEM OF KARL MARX.
and obtain results, the greater the prosperity and the longer
it lasts. But the undertaking has to be finished some day.
and the harvest must at last be gathered in. Then it is
discovered that the undertaking was a failure. The rail-
roads, it turns out, were not necessary where they were
built, for they have nothing to carry when they are ready
for business. The undertaking goes into liquidation. The
vast amounts of capital, the glorious piles or stretches of
means of production, now represent so much waste, for
capital which does not pay dividends is not capital accord-
ing to capitalistic laws. Then the crisis is on — things go
to smash all around. The crisis is not limited to those in-
terested in the particular undertaking. First, because the
ramifications of modern capitalistic undertakings are so ex-
tensive and complicated, particularly by reason of our
credit system, that no serious break can occur anywhere
but that the whole system will crumble to its foundations.
Secondly, because the large number of men employed in
producing the defunct " means of production " are now
thrown out of employment, thereby weighing heavily on
the labor-market and demanding charity from their mas-
ters. And thirdly, because the apparent prosperity incident
to the continued production of the large " means of pro-
duction," has caused a general rush of production to an
unwarranted extent, even in spheres which are not in any
way directly connected with the particular undertaking
which brought about the prosperity and the
crisis.
The deductions which Tugan-Baranowsky himself makes
from these facts are very curious and furnish a good object
lesson in the mental pathology of our age. We can not,
however, pursue this branch of the discussion here any fur-
ther. We hope to resume this very interesting discussion
some other time. For the present we will try to make
some deductions on our own account, as far as they may
be pertinent to our subject proper. The first irrefutable
deduction which presents itself to our mind, not only from
THE SOCIAL REVOLUTION. 249
the facts adduced by Tugan-Baranowsky, but also from his
own statements, is that his theory, the perpetuation of
capitalism by means of the proper " distribution " of pro-
duction, is the veriest rot. Prior to 1857 a change occurred
in the " distribution " of the production of the chief seat
of capitalism in those days, England. The production of
cotton goods (consumption goods), was relegated to the
background, and the front rank was assigned to iron-goods,
(means of production). In other words, Tugan-Baran-
owsky's advice of how to prevent a crisis because of over-
production was followed. But the crisis of 1857 did come,
notwithstanding the use of his patent remedy. The faith of
the capitalists in his remedy was evidently shaken a bit.
For, as he has told us, the capitalists, instead of continuing
the production of their means of production for the same
market, which, according to Tugan-Baranowsky's theory,
can never be over-stocked with means of production,
set about looking for NEW MARKETS. The only thing in
which they followed him still was the " distribution " of
production; they still produced means of production by
preference. But the crises still continued to set in regu-
larly, driving the poor capitalists to distraction in their vain
hunt for new markets. In other words, THE NEW MARKETS
WERE ALSO SOON OVER-STOCKED WITH MEANS OF PRODUCTION.
And very naturally so: for means of production (and this
includes means of communication), are nothing more than
MEANS to the production of consumable goods. Where,
therefore, there is no demand for the consumable goods
ultimately to be produced by their means, their production
is over-production, and is so found to be when the ultimate
test is applied. The capitalists discovered this much sooner
than did Tugan-Baranowsky, owing to their healthy wolf-
instinct of capitalism, which can not be fed on fairy-tales,
but requires good dividends to appease its vhunger. Seeing
that they are at the end of their tether, that the reserve
of markets is giving out, while those under exploitation are
geting hopelessly over-stocked, they set about fighting each
250 THE THEORETICAL SYSTEM OF KARL MARX.
other like wild cats in a scramble to get, each for himself,
as much as possible of what is left. Capitalism reversed
its time-honored policy of free-trade, and the era of wild
imperialism in which we live has set in.
Modern crises and modern imperialism are very in-
structive studies. As Marx said, crises are mere SYMP-
TOMS of the contradictions working within the bowels of
capitalism, and a means of RELIEVING the diseased condition
when it becomes acute. They are not the malady itself, they
merely show the presence of the malady. So does im-
perialism. As a matter of fact, modern crises and modern
imperialism are manifestations of the same condition, and
are merely two phases of the same process. Among other
things, they show how the capitalist system is kept alive
by waste.
The waste of the capitalist system is of two kinds, ordi-
nary and extraordinary. The ordinary waste is the most
important, because the more extensive ; it is, however, the
extraordinary waste that permits us to get a glimpse into
the vital forces of capitalism, and is, therefore, of greatest
interest to us here. It is this extraordinary waste that
manifests itself in crises and in imperialism. We have
already stated how imperialism has been heralded as the
saviour of capitalism from crises and ultimate destruction by
providing new markets for its surplus-product. It was point-
ed to that the great crisis which was scheduled for the begin-
ning of this century did not come in, and this is claimed to
be due to the opening up of new markets by the imperialistic
policy of the modern capitalistic nations. In a way, this
is true; the effect of a crisis being the destruction of the
surplus-product which can not be absorbed by the social
organism, and the permission of the resumption of normal
production by removing the surplus-product from the mar-
ket, anything that will serve the same purpose may, for
the time being, take the place of a crisis. A great war,
for instance, may have the same effect. It has usually been
assumed that wars bring about crises. While it is true
THE SOCIAL REVOLUTION. 25!
that under peculiar circumstances, particularly because of
credit relations, the declaration of a war may hasten on an
impending crisis, or even bring a financial one about, the
usual and general effect of a war is just the reverse. A
great war usually keeps a crisis out, for the reason that
economically it has the same effect as a crisis and can take
its place. After a great war an era of prosperity usually
sets in, for the same reason that great prosperity usually
follows a great crisis. The longer the war, the greater
the destruction of property, both actual and potential, the
greater the prosperity that will follow it.
A policy of imperialism, aside from the actual wars which
it may lead to, has in itself the same effects, and that is
why it is beneficial to capitalism. Among the economic
causes of the great popularity of imperialism must not only
be counted the desire for new markets and their actual at-
tainment, but the economic causes of the policy of hunting
for new markets itself. We will illustrate this by an ex-
ample. During the last presidential campaign in the
United States the anti-imperialists made very much of cer-
tain statistics compiled by the late Edward Atkinson, show-
ing that the expense to the United States in keeping and
governing the Philippines was greater than what the whole
trade of the United States with those islands amounted to.
The anti-imperialists argued that it was the height of folly
to pay more than a dollar for the opportunity of selling a
dollar's worth of goods. From their own shop-keeper's
point of view that is undoubtedly true. Not so from the
standpoint of the modern, means-of-production-producing
capitalism. There arise times when goods must be gotten
rid of at any expense. As these goods consist of means
of production they can not be given in charity to the work-
ingmen, nor destroyed bodily the way the western and
southern farmers and planters destroy part of their crops,
when they are too plentiful, in order to keep up the prices.
These goods being capital, can only be gotten rid of by
being sold or " invested." Hence this apparent craze for
252 THE THEORETICAL SYSTEM OF KARL MARX.
new markets. But this is not all. As far as the safety
of the capitalistic system is concerned, in so far as it affects
the " general prosperity of the country," as it is euphoni-
ously styled, the millions expended in the effort to sell
goods to the Philippines are not waste but gain. These mil-
lions represent so many millions worth of goods sold by the
capitalists of the United States for unproductive consump-
tion by military and civil employes and officials, a very
effective though not always profitable way of disposing of
a surplus-product which threatens to clog the wheels of
business. It is true that this is sheer waste. But it is on
waste that the capitalist system now depends for the con-
tinuance of its existence.
In this connection it must be added that it is not only
the moneys so expended directly that are wasted in that
manner and for that purpose, or at least with that effect.
To the direct expenses of colonies must be added the gen-
eral military and naval establishments of modern nations,
which are necessitated by this imperialistic policy. Every
dollar expended in the military and naval " needs " of a
country are the purest waste, but it is at the same time
absolutely necessary for the preservation of the capitalistic
system. Furthermore, it is not only the money expended
on these " needs," and included in the official budgets, that
must be taken into consideration. The big military and
naval establishments require men, besides money. These
men are taken away from ordinary production where they
would compete with other men in the labor-market, and
where the products by them produced would swell the
masses of surplus-product to be disposed of in far-away
lands. The taking away of a man for military or naval
purposes (including administrative duties of all sorts),
relieves the labor-market by one man, and at the same time
creates a demand for the goods to be consumed by him
which are to be produced by those remaining at work at
I some useful occupation. Hence our continued prosperity.
V WASTE is the safety-valve of capitalism.
THE SOCIAL REVOLUTION. 253
How long will this last? Evidently not forever. If the
surplus-product can only be gotten rid of by waste, and
by the kind of waste described above, and if the surplus-
product which must be disposed of by such waste is always
increasing, we will evidently reach a stage when it will be
physically impossible to dispose of it. In saying " phys-
ically " we take, of course, into consideration human nature,
which is part of the " physics " of our social system. There
is, however, no warrant for assuming that according to
Marx capitalism would have to go on until such a " phys-
ical " catastrophe should occur. This theory of a final ca-
tastrophe which has been much exploited by Marx-critics
is the result of their woeful ignorance of the Marxian phi-
losophy and the connection it has with his economics.
Even Tugan-Baranowsky says that in order that the trans-
formation from capitalism to socialism should follow as
an economic necessity, according to the Marxian philoso-
phy, the impossibility of the continuance of production un-
der capitalism indefinitely must be proven. That is why
he exerts himself so much to prove that an absolute im-
possibility does not follow from an analysis of capitalistic
production. But this assumption is entirely wrong. The
Marxian philosophy does not require the arrival at an
economic impossibility. This is a figment of the imagina-
tion of those who understand under the Materialistic Con-
ception of History a Mechanical Conception of History.
Such is not the Marxian philosophy. It will be remem-
bered that in describing the causes for social revolution
generally, in outlining his philosophy of history, he says
that a revolution occurs whenever the superstructure of
laws, etc., turns from a means of helping production into
fetters of production. He does not say that production
under the old system must become impossible before a revo-
lution sets in, but it is according to his 'theory sufficient
that it becomes " fettered." And in speaking of the par-
ticular revolution now under discussion, that from capital-
ism to socialism, he says that the " knell of capitalist pri-
254 THE THEORETICAL SYSTEM OF KARL MARX.
vate property sounds " when " the monopoly of capital be-
comes a fetter upon the mode of production, which has
sprung up and flourished along with it, and under it."
When " centralization of the means of production and
socialization of labor at last reach a point where they be-
come incompatible with their capitalist integument." Ac-
cording to the Marxian philosophy a system of production
can only last as long as it helps, or at least does not hinder,
the unfolding and full exploitation of the productive forces
of society, and must give way to another system when it
becomes a hindrance, a fetter, to production. That a sys-
tem has become a hindrance, and a fetter to production
when it has reached the point when it can only exist by
preventing production, and by wasting what it has already
produced, goes without saying. Such system cannot there-
fore last very long, quite irrespective of the purely mechan-
ical possibility or impossibility of its continuance. Such
a system has become historically impossible, even though
mechanically it may still be possible. As we have seen,
the capitalist system has reached that point: The capital-
ist system must go.
CHAPTER XI.
CONCLUSION.
We have now capped the climax of the Marxian argu-
ment, roofed the edifice of his theoretical structure, and it
stands before our eyes a finished whole — a monument of
the greatest thinker of the Nineteenth Century and a bea-
con-light to struggling humanity. It is not the magnifi-
cence of the structure, however, that interests us most, (for
it is not our task to extol the personal merit and genius
of Marx), but the character of this structure, the relation of
its parts to the whole. We stated early in our discussion
that the Marxian theoretical system is one solid structure
and cannot be properly understood unless viewed as a
whole; that it must be examined as a whole, and accepted
or rejected in its entirety. We hope that we have succeeded
in proving at least that proposition. Whatever our judg-
ment may be as to the merits of the Marxian theoretical
system, one thing we hope to have established beyond the
possibility of a doubt: like the stones under the head of
Jacob, so have the different elements which go to make up
the Marxian system been welded by superior power into one
swhole. From the explanation of the hoary past, through
the appreciation of the contending forces of the present, to
the vision of the rising sun of the future — from the pref-
ace to Zur Kritik, declaring the laws of the historical
march of civilization, through the intricacies and subtleties
of the laws of value governing the capitalist system, to the
sounding of the bells ringing out the old and, decrepit capi-
talist system and ringing in the new and vigorous socialist
society — the whole of the grandiose structure reared by
Marx is hewn from one stone. Its foundations lie in the
255
256 THE THEORETICAL SYSTEM OF KARL MARX.
past, its frame work embraces the present, and its lofty
tower pierces the future.
Marx's socialism is neither the result solely of his hatred
of the oppressors and love for the oppressed of the present
social system, nor is it the dream-like construction of his
fervid imagination; it is the logical conclusion of Iiis read-
ing of the past and his understanding of the present of our
civilization. It is equally absurd to say, with Prof. Selig-
man, that Marx's interpretation of history has nothing to
do with his socialism, as it is to say, with Bernstein, that it
is immaterial to Marx's socialist predictions whether his
theory of value be sound or not. We have seen the cor-
rectness of Marx's interpretation of history; we have seen
the correctness and the precision of his analysis of the
workings of the capitalist system; and we have seen, above
all, the irresistible manner in which his socialist conclusions
flow from those premises, and the absolute necessity of those
premises for his socialist conclusions. We have seen, in
fine, what a great light the contemplation of the who] i sheds
upon each and every part thereof. But even should the
reader disagree with us on that, he surely cannot deny the
justice of our claim that he can accept the Marxian system
as a whole or leave it as a whole, but he cannot take part
of it, and leave the rest, and above all he cannot take the
conclusions without admitting the premises.
APPENDIX I
THE MATERIALISTIC CONCEPTION OF HISTORY AND PRACTICAL
IDEALISM.
The following essay was written over six years ago, and
appeared originally in the Haverhill Social Democrat. It is
reproduced here substantially without any change, except
that passages of a purely personal nature and containing al-
lusions which would not be readily understood by the gen-
eral reader were left out. Some of the statements would
be couched by the author in different language now. But
there is no substantial difference between the views then ex-
pressed and those held by the author now. And as the
purpose of the essay was not to give an exposition of the
subject but to record the views held by the socialists, it was
deemed .advisable to retain not only the substance but also
the form, and to bring it up to date by adding at the end
some opinions expressed since its first publication.
In the September, 1900, issue of the International Socialist
Review appeared an article by Comrade Robert Rives La-
Monte under the caption of " Science and Socialism," * in
which was treated, among other things, also of the ma-
terialistic conception of history. In a communication to
The People, printed October 28th, 1900, I took exception
to the views expressed by Comrade LaMonte in his article,
claiming that the article sinned against the truth in drawing
an analogy between Society and the Individual with respect
to the motives that impel him to action and in asserting
that the individual is prompted in his action by his own
material interests. I insisted, on the contrary, that there
was no analogy in this respect between Society and the
Individual; that the individual in his private conduct is not
always guided by his material interests ; tttat with the best
* This issue of the Review is out of print, but the essay was reprinted in
a book by Comrade LaMonte, entitled Socialism, Positive and Negative,
Chicago. Charles H. Kerr Company, 1907, cloth, 50 cents.
257
258 THE THEORETICAL SYSTEM OF KARL MARX.
of men ideal motives are supreme; that the materialistic
conception of history applies to Society only, and to history
only, that is, to Society in the process of change; that,
however, when we take society in a given moment detached
from what preceded it and what follows it, we find that even
in society as a whole, in this stationary condition, ideal
motives and not pecuniary interests play the leading role.
And that, notwithstanding this, the materialistic conception
of history is correct. And, furthermore, that because when
viewing society in its process of change, we find that the
ideas which play an important role in the activity of any
given society at any given moment, had their genesis in the
economic conditions of the time or of some time which pre-
ceded it, it follows that considering the history of society
philosophically, the economic factor is supreme in the evolu-
tion of society.
Speaking of the article generally, I characterized it as con-
fusing, because it is a mixture of correct Socialist doctrine
and the views just now criticized which are contradictory
to those doctrines, and as pernicious, because it plays into
the hands of the enemies of Socialism in lending a sem-
blance of authority to the perversions of the materialistic
conception of history, which our enemies have all along
tried to confuse with a grossly materialistic view of life,
and brand as opposed to practical idealism.
I particularly objected to the article because it assumed to
express not the individual views of Comrade LaMonte, but
the accepted doctrines of all authoritative Socialists, and all
those who " talk intelligently " of the materialistic concep-
tion of history. This communication of mine aroused the
ire of H. L. Slobodin. In quite a lengthy article (Tin-
People, November 4, 1900), salted and peppered with per
sonal abuse after the famous recipe of a late unlamented
master, he invokes heaven and earth, the shades of i lades
and the rhetorical figures in Brown's grammar, to a
lentless war against my " ignorance," " arrogance," and m<M
of all my " noble-mindedness."
The points he makes, as far as they appertain to the dis-
cussion, are, as follows:
1. I garbled LaMonte's articlfc when I ascribed to La-
Monte the notion that pecuniary interests dominate the life
of the individual.
2. That, assuming LaMonte to have intended to say that
private material interests dominate the life of the individual
in the same way as the economic factors dominate the his-
APPENDIX. 259
tory of society, his position is still correct, as such views are
" much more akin to historic materialism than " my own
views as stated in my communication to the People. To
quote the whole passage : " Comrade Boudin distorts La-
Monte's proposition, attaching a meaning very remote from
it, namely, that by economic conditions LaMonte means
' pecuniary interests.' But even in its garbled form, the
proposition of LaMonte is much more akin to historic ma-
teralism than the ' noble-minded idealism of Boudin.' " I
have committed all manner of crime by saying that
Socialists are usually " idealists of the purest type " in
practical life. To use his own classical language : " I am
in doubt whether the Socialists will receive this as a flattery
or a libel. Myself, I am inclined to retort : ' Comrade
Boudin, you are another.' "
And I have sinned even more in stating that, in practical
life, men are moved by a sense of justice and by ideals.
It follows from the above that the questions now at issue
are:
First: Have I garbled Comrade LaMonte's article, or
distorted its meaning?
Second: Does the materialistic conception of history ap-
ply to the conduct of individuals or are the factors that
impel the actions of individuals the same that move societies?
More particularly, is the view that individuals are moved by
pecuniary interests only, " much more akin to historic ma-
terialism " than the veiw that the materialistic conception
of history has nothing to do with practical idealism, and that
Socialists may therefore be, and usually are, idealists in
practical life?
I want to state right here that, for the purposes of the
present discussion, it is immaterial whether this position of
LaMonte is correct in itself or. not. We may yet have a
chance to break a lance on that score. Here the only ques-
tion is whether what LaMonte and his friend say is what
authoritative Socialists mean when speaking of the ma-
terialistic conception of history. In my communication
to the People I expressly stated that I objected princi-
pally to LaMonte's article because he insisted that his
views were those of authoritative Socialists, and that in my
opinion that was not so, whatever the merits of those views
may otherwise be. And this is the only thing that I intend
to prove now.
Says Karl Kautsky, now the leader of Socialist thought
26*0 THE THEORETICAL SYSTEM OF KARL MARX.
the world over (Neue Zeit, XV, I 215): "I have pointed
out to Bax in my reply to his article in the Zeit, that he
commits the quite preposterous blunder of confusing material
conditions with material interests. And what does Bax
answer? Not enough that he confuses material conditions
with material interests, he actually sticks to this confusion,
after his attention is called to the nonsensity of interchang-
ing these terms ! Does Bax really not know what is to be
understood under the material conditions of a society? The
material conditions are the conditions of production, — this
word taken in its most comprehensive sense. How can one
insist that this is for the materialistic conception of history
quite the same as the material interests of classes and na-
tions? (We imagine Kautsky's surprise if he were to learn
that here are materialists who are not content with con-
fusing material conditions with the material interests of
classes and nations, but actually confuse it with the material
interests of individuals!) The difference between the two
words can be seen from the following consideration : It is
in my opinion possible to explain the aversion to earthly
things and the longing for death of Christianity by the ma-
terial conditions of the time of the Roman Empire. It \vere
however preposterous to try to find a material interest as a
cause of the longing for death ! "
And again : " Others, again, throw into the same pot the
animal organism and the social organism, the law of the
evolution of society and of the individual and the species."
This hits the nail squarely on the head. The law of the
evolution of society is not the same as the law of the evolu-
tion of the individual; and in the evolution of society even,
it is not the material interests of classes or nations that
is the moving power, but the material conditions, which is
something quite different.
As a logical corollary of the ignorance displayed by Kaut-
sky in the above, come his views about the role of the in-
dividual in history. Ignorant as he is of the great doctrine
of " economic determinism " announced by LaMonte, which
compels the individual to act in accordance with his ma-
terial interests, Kautsky has the " arrogance " of expressing
himself as follows on that point: " Here we conn- to the
(juotion what role does Man, or if you like it better, Spirit,
the ' psychological impulse,' the Idea, play in history. To
the idealistic philosopher the idea may have an independ-
ent existence. To us the idea is only a function of the
brain, and the question whether and how the idea can
APPENDIX. 26l
influence society is identical with the question whether and
how the individuals can do it. Bax will be much surprised
when I declare that I agree entirely with the proposition
laid down by him in seeming opposition to my views,
namely : ' Economic formations make history only in con-
junction with the human spirit and will."
What a pity that Kautsky did not read a few books on
natural history or at least the article of LaMonte's Champ-
ion, because then he would not have talked such nonsense
about " Man " and the " human spirit," he would then have
known that there is nothing about man and human nature
to talk about, that " there is a species of small but ferocious
pig that are known to deliberately " sacrifice themselves for
a friend.
As it is, however, Kautsky abides in ignorance, and
therefore proceeds in this wise : " On the other hand,
the selection of the problems to which he (the individual)
devotes himself, the view-point from which he approaches
their solution, the direction in which he looks for the solu-
tion, and finally the energy with which he goes to bat-
tle, for an explanation of these we cannot look to economic
conditions only. Alongside of these there also come into
play the peculiarities in which the individual has developed
owing to the peculiarities of his natural parts, and the
peculiarities of the particular circumstances in which he
found himself. All the above mentioned circumstances
exert an influence if not on the direction, then on the way
and manner in which the, a*fter all inevitable, result is to
be. And in this respect single individuals can do much,
very much for their contemporaries . . . Some as
thinkers, by obtaining a deeper insight than those who sur-
round them, by freeing themselves more than those from
the inherited traditions and prejudices, by overcoming class-
stupidity."
It is clear from the above that Kautsky is of the opinion
that some people may, for no other reason but because
they think, accomplish very much for their contemporaries.
And in order to do such good they not only neglect their
own material interests, but they rise above the material
interests of their class, overcome the stupidity or narrow-
mindedness (Bornirtheit) of their class.
This last phrase about the class-stupidity (Klassen-
bornirtheit)is interesting. And Kautsky, who was evidently
aware that he was treading upon the corns of some so-
called Marxists, proceeds to elucidate his position thus;
262 THE THEORETICAL SYSTEM OF KARL MARX.
" The last assertion may sound strange in the mouth
of a Marxist. Socialism is however, in fact, based on the
overcoming of class-stupidity. For the narrow-minded
(bornirt) bourgeois the social question consists of the prob-
lems how to keep the workingmen peaceful and their
necessities minimal; for the narrow-minded wage worker
it is only a question, of stomach, the question of high wages,
short hours, and secure employment. We must overcome
the narrow-mindedness of the one as well as of the other,
before we can come to the understanding that the solu-
tion of the social problem of our times must embrace much
more, much that is only possible in a new form of society
. . . The thinker, who overcomes tradition and class-
stupidity, assumes a higher standpoint and thereby discov-
ers new truths, that is, comes nearer the real solution of
the problem than the average individual. He must not,
however, expect to be received with favor by all classes.
Only those classes will agree with him whose interests lie
in the same direction as the general evolution, — often not
even these when the thinker has raised himself too far
above his surroundings."
The question of the limits of the influence of economic
conditions, and the play of the influences in society, is more
fully discussed by Kautsky in his articles written in the
Neue Zeit in answer to Bernstein's famous book. In the
article on Materialism Kautsky says:
" But let us look a little closer at the different factors to
which Bernstein calls our attention: Here we have along-
side of the forces and circumstances of production, the
juridical and moral conceptions, and the historic and
religious traditions. But what are the traditions even ac-
cording to the ' more progressive ' formulation of the
materialistic conception of history if not the product of
preceding sociafl forms, consequently, also of preceding
forms of production ; and likewise the juristic and moral
conceptions, as far as they are traditional and do not arise
out of the social forms existing at that moment. . . .
" So we can upon closer scrutiny reduce the factors
which play a part on the surface of history, which Bern-
stein points out, to ultimate economic factors; and his de-
mand will simply mean that the history of a given time
cannot be explained by its own economic history only, but
that we must ' take into account ' the whole economic de-
velopment preceding it, together with its heritage from
primitive times. . . .
APPENDIX. 263
" Had Bernstein wanted to say that the materialistic con-
ception of history developed, in that, in the beginning, it
overestimated the direct influence of the form of production
prevalent at a given time, and undervalued the indirect
influence of pre-existing forms, then there would be room
for discussion. In fact, the progress of prehistoric re-
search, which was scarcely born at the time of the original
formulation of the materialistic conception of history has
materially influenced the latter. A development of the
theory in this sense is to be noticed, and it was stated as
a fact by the fathers of the materialistic conception of
history themselves."
The reader will have seen that in Kautsky's mind there
was absolutely no question that the juridical and moral
notions current in society have a great influence on that so-
ciety, because the changes in society are worked by the
agency of individuals, and individuals are admittedly (to
Kautsky's mind) influenced by their judicial and moral no-
tions. The debatable ground to him was, as to the origin of
these notions, whether they could be traced to economic con-
ditions directly by showing that they were the result of
the economic forces and circumstances of that society it-
self, or whether they could be traced to economic conditions
only indirectly, that is, by showing that although they were
inherited, and therefore not the result of the economic con-
ditions of the society over which they exert their influence,
they were originally the result of economic conditions, name-
ly, of the conditions of some previous society in which
they had their origin. And even as to that Kautsky says
(as we have heard him say before in his answer to Bax,
quoted above) that there is no question but that some ideal
influences can be traced only indirectly to economic condi-
tions, and the question then reduces itself to one of the
relative strength of the ideal influences which can be ex-
plained by the economic conditions of the time, and those
which we have inherited from our fathers and can, there-
fore, be explained only by the economic conditions of some
former historical epoch. And as to the this latter question,
he says that, in the younger days of our materialistic
philosophy, we were prone to over-estimate the direct in-
fluences at the cost of the indirect, but jthat now we give
those influences which can be traced only indirectly to eco-
nomic conditions their full due, and this is done not in
opposition to the views of Marx and Engels, the fathers
264 THE THEORETICAL SYSTEM OF KARL MARX.
of our modern materialist philosophy, but in conformity to
their views.
When we remember that so-called indirect influences of
economic conditions have absolutely nothing whatever to do
either with our economic or material interests, nor even
with our economic conditions, in the sense in which Kaut-
sky uses the word, — Kautsky's views reduce themselves to
the following: Not only are individuals prompted in their
actions by ideal motives, but moral (that hated word
"moral"), juridical, and other ideal influences which are
not in any way connected with the economic conditions of
our own society, play an important role in it.
And in order to prove to Bernstein that it is pretty hard
to " improve " on Marx and Engels, and incidentally to
guard against confusionists who do not know the difference
between a theory of history and a code of practical ethics,
he uses the following example: "Suppose that a naturalist
had in one of his earlier works declared that the light and
heat of the sun were the ultimate moving powers of all
organic life on earth. In his later years he received an in-
quiry as to whether it were true that, according to his theory,
the growth of a tree depended solely on the quantity of
light and heat that it received directly from the sun. To
this he naturally answered, that it was nonsense; that his
theory must not be interpreted that way, that he knew very
well that the quality of the seed, the soil, the condition of
moisture and dryness, the direction and strength of the
winds, etc., have likewise an influence on the growth of
trees. And then comes a commentator, confuses the direct
influence of the sun on vegation with his being the ulti-
mate sole power-source on the earth, and declares, then, that
the theory of the naturalist must not be taken in its first,
one-sided, form, but in its last, qualified and therefore much
more scientific form. He overlooks entirely the circum-
stance that in this form the theory ceases to be of scientific
importance; it becomes a commonplace, familiar to every
farmer during thousands of years."
Kautsky claims, and he is certainly right in doing so, that
when a great thinker announces a new theory he need not
go into lengthy explanations that it is not what other
people may think it is by absurdly perverting it, but he
may leave that to the common sense of those that follow
him. And yet, had Kautsky had a chance to read the
Socialist literature on this side of the ocean he would not
have scoffed so cruelly at Bernstein's painstaking state
APPENDIX. 265
ments of the limitations of the materialistic conception of
history, as he would have seen that there are farmers here
who, after having heard of our naturalist's theory insist
on planting trees on brick walls as long as they are directly
against the sun.
That Kautsky is correct in his statement that Marx and
Engels never denied the influence of ideas in the history
of society, and gave quite a prominent place to indirect
influence of economic conditions, this even in the earlier
of their writings — is plain to every student of Marx and
Engels, who has studied their philosophy not from second
hand. Of course, there is, as far as I can remember now,
nowhere in their writings to be found a direct denial of the
absurdities of LaMonte & Co., for the reason stated by
Kautsky and quoted above; but there is abundant refutation
of it. I shall bring only one quotation from Marx and one
from Engels directly in support of Kautsky's views, and
when we bear in mind that Marx at least has never written
any book or even essay giving an exposition of his phil-
osophy, this will be enough to satisfy the most exacting.
Says Marx in 1845:
"The teaching of the materialists (the ante-Marxian ma-
terialists, of course) that man is the product of circum-
stances and education (Erziehung), that changed men are,
therefore the product of different circumstances and changed
education, forgets that circumstances themselves are changed
by men, and that the educator himself must be educated."
Sapientis satis.
Engels is more circumstantial. Says he:
" Men make their history, whatever way this may turn
out, by each one pursuing the aims he consciously sets to
himself, and the resultant of these wills, in many different
directions working, and their manifolded influences on the
outer world, are just history. It is therefore also important
what these many individuals want. The will is determined
by passion or consideration. But the levers which in turn
directly determine the passions or considerations are of dif-
ferent kinds. Partly, these may be circumstances standing
outside the individual; partly, ideal motives, ambition, en-
thusiasm for truth and right, personal animosity, or even
purely individual whims of all sorts. But, <in the first place,
we have seen that the many individual wills which are ac-
tive in the making of history produce mostly quite different,
often just opposite, results from those desired; their mo-
tives are therefore, also, for the collective result only of
266 THE THEORETICAL SYSTEM OF KARL MARX.
secondary importance. And, secondly, the question still re-
mains, what propelling forces are behind these motives, what
historical causes are they that form themselves in the minds
of the acting personages into these motives?
" This question the old materialism never put to itself.
Its historical conception, so far as it had one at all, was
therefore in its essence pragmatical, judging everything
by the motives of the action; it divides the persons acting
in the historical process into noble and ignoble ones and
finds then that as a rule the noble ones are the conquered
and the ignoble the conquerors. Whence it follows, for the
old materialism: — that the study of history is not very
edifying; and, for us, that on the historical field the old
materialism is untrue to itself, because it takes the ideal
motives which exert ther influence there as the last causes,
instead of examining what may be behind them, what are
the motives of these motives. Not in that lies the in-
consistency that ideal motives are acknowledged. But in
that that they are accepted as final, and are not reduced
to the causes that move them."
This is quite plain. No wonder LaMonte does not like
Engels and appeals from him to Deville (to whom, by the
way, he ascribes nice "distinctions," which do not right-
fully belong to him.)
The question as to whether those who believe in the
materialistic conception of history can be idealistic in prac-
tical life, have ideals the attainment of which they desire,
and be actuated in their actions by ideals, has naturally
been discussed more or less by the leaders of Socialist
thought. As is also natural, such discussions were always
provoked by some opponent of Socialism trying to make
believe that the materialistic conception of history led its
followers to adopt "materialistic" views of life and ex-
cludes all ideals. This the Socialist theorists were not slow
to brand as malicious fabrications and imaginings born of
ignorance.
Franz Mehring, one of the brightest minds of the party in
Germanv, and one of those who are accused of being too
strict and " narrow-minded " materialists, has the following
to say on the subject (Lessing-Legende) :
" We shall first dispose of two current objections to
historic materialism, which attach to the meaning of the
word. Idealism and materialism are two answers, in op-
position to each other, to the basis question of philosophy :
the relation between the understanding and reality, or to put
APPENDIX. 267
it in a simpler way : the question as to the priority of mind or
matter. In themselves these two terms have nothing to do
with ethical ideas. A philosophical materialist may cherish
such ideals in the highest and purest degree, while the
philosophical idealist may be completely destitute of them.
However, the term materialism, owing to its being contin-
ually defamed by persons, has in time acquired something
suggestive of immorality which gradually made its way into
bourgeois literature. ' The Philistine understands under
materialism gluttony, drunkenness, lust, pride, rapacity,
greed, profit-hunting, etc., in short, all those repugnant
vices to which he is covertly subservient; and under idealism
he understands the firm belief in virtue, the brotherhood of
man, and generally a " higher world " of which he de-
claims, and in which he perhaps believes when he has to go
through all the misery which necessarily follows his " ma-
terialistic" excesses, chanting the refrain: What is man,
— half brute, half angel' (this quotation is from Engels).
If we are to use these words in this, secondary, sense, it
must be admitted that nowadays it requires a good deal of
ethical idealism to have the courage of professing historic
materialism, for it invariably carries with it poverty, perse-
cution and slander, while the profession of historic idealism
is the business of every heeler, for it offers the best pros-
pects to all earthly goods, to fat sinecures, orders, titles and
dignities."
As the reader sees, far from being horrified at the thought
that a Socialist may be an idealist, as LaMonte's Champion
is, Mehring says that it requires a lot of ethical idealism
to be a materialist, or, as I said, simply a Socialist.
So says also Sadi Gunter, perhaps the only man in Ger-
many who has the distinction of being acknowledged a
philosopher both by Socialists and bourgeois. In an article
which appeared in the Neue Zeit (1897-98, No. 41) he
makes use of the following language:
"There is a firmly rooted prejudice in the educated cir-
cles of the bourgeoisie that the materialistic conception of
history excludes all ideals. Even men who begin to advance
theoretically towards the materialistic conception of his-
tory, and do not dismiss it, like Dr. Earth, with a few
phrases which only show a lack of understanding on the
part of those who use them, still find in that prejudice a
cause which prevents them from joining it entirely. . . .
We must however discuss more fully the second objection
which is based on that very widely accepted metaphysical
268 THE THEORETICAL SYSTEM OF KARL MARX.
error, that PRACTICAL IDEALS must have as their foun-
dation THEORETIC IDEALISM (all italics in the text).
Here we must prove that Stammler uses an untenable dou-
ble book-keeping in which the entries do not balance. And
this we must prove by a positive demonstration, — ist, That
and how the spiritual phenomena must work in the chain of
cause and effect; 2d, That and how in the historic material-
ism— which must be carefully distinguished from common
materialism — a practical idealism is not only possible, but
necessary.
" In such cases the ideal acquires in man a quite all-
powerful impetus. And it retains its power of a forward
motor even if the goal to be achieved cannot be reached
in the way looked for; because it enhances the powers and
impels to find other ways of solution, when those originally
hoped for prove inadequate. This is the reason why the
goal of Socialism, the emancipation from the yoke of cap-
italism and the establishment of a more harmonious social
order, could seize upon the masses so powerfully, impel
them forward and elevate them even while the present sys-
tem continues (heute bereits emporzuheben vermocht).
. . . This ideal in social life is the Socialistic ideal of
to-day. Socialism requires the nationalization of the means
of production not for the material reason that the proletarian
should be able to eat and to drink more comfortably. The
Erfurter Program, to which the whole German Party ad-
heres, states most emphatically that the socialization of the
means of production is necessary in order to transform the
capitalistic mode of production from a ' source of misery to
a source of the highest well-being and harmonious develop-
ment of man.' "
" We must not overlook the phrase ' harmonious develop-
ment.' ... If this be the case, it is evident that \vr
may require the nationalization of the means of production
only in so far as it serves our aim as a harmonious develop-
ment. This nationalization is a means only, and not an
end in itself. The ideal for the sake of which nationaliza-
tion is desirable, is human perfection. And this ideal is a
necessary motive power to further development, — a m<
power which is as well an effect of evolution as it is a
necessity to the further realization of our aim." . . .
"Not only is historical materialism, therefore, far from
destroying practical idealism, but on the contrary, it raises
it to such a power over the mind and clarifies it to such a
APPENDIX. 269
purity as no other system was hitherto able to attain for
it."
The point I wish to make here is in relation to the horror
with which the " sense of truth and justice," attributed by
me to the uncorrupted human nature, inspired my adver-
sary. If it were not for the fact that he probably con-
sidered himself among those whom I excepted from this
horrible imputation, he would have said that I was another.
. . . As it is, however, he limits himself to instructing
us about the nature of the celebrated •'" small but ferocious
pig," which is not exactly to the point, as I have never
harbored any designs upon the fair name and reputation of
my friend's protege, and informs us that an old writer is
quoted as saying : " A dog is the only thing on this earth
that loves you more than he loves himself." After having
thus exhausted the wells of wisdom of all the ages, and after
having cruelly enjoyed my humiliation, he introduces a
" philosophical sow " to the utter discomfiture of all " ideal-
ists," whom my friend cordially hates.
However, one consolation still remains for me, discomfit-
ted as I am; and that is that I am in quite good company.
There is for instance, J. Stern, a man who only recently was
held out by George Plechanoff, that " narrowest " of the
doctrinaires of materialism, as the model of a Socialist
philosopher. In his book on the philosophy of Spinoza, pub-
lished by the German party's publishing house, Stern takes
the position I do. But, finally, here is Kautsky again, to
share the odium of " noble-minded idealism." In his re-
sponse to Bernstein, he says:
" The ideologists ceased to be a ruling class. But they
have at the same time ceased to be a class altogether. They
ceased to present a compact class with separate class-inter-
ests. They form an aggregation of individuals and coteries
with the most widely different interests. As repeatedly said
before, these interests touch partly with those of the Bour-
geoisie, and partly with those of the proletariat. At the
same time their education enables them the quicker to gain
a higher standpoint in the contemplation of social develop-
ment. Not actuated by pronounced class-interests, often
acting on the basis of a deeper insight into the interde-
pendence of social phenomena gained by mental work, the
representatives of the intellectual classes (Intelligenz) feel
themselves to be the representatives of the common interests
of the community as opposed to the class-interests, — the rep-
270 THE THEORETICAL SYSTEM OF KARL MARX.
resentatives of ideas that are independent of economic
motives. And the intelligent classes (Intelligenz) are con-
stantly growing. Therewith grows visibly the common-in-
terest as against the class-interests, grows the independence
of the arts, sciences and the ethical viewpoint of the
economic forces. Only when we interpret Bernstein's words
to mean this, they become understandable (begreiflich) and
lose their mystical character; but then they also cease to
prove anything against the materialistic conception of his-
tory."
In a review of Anton Menger's book " Neue Sittenlehre,"
in the Neue Zeit of October 14, 1905, Karl Kautsky says,
among other things:
" Political and social struggle is impossible without moral
indignation (sittliche Empoerung) against the opponent.
" The moral indignation against given political and social
conditions, against the material oppression of the social
powers, is therefore the first and the last, the basic form of
the manifestation of the class differences, the most primi-
tive and lasting mainspring (Triebfeder) of the class strug-
gle."
And then he states, referring to Menger's ethical theory
and the statements of some reviewers that it was identical
with the theory of ethics of the Matrialistic Conception of
History:
" To say that the conception of historical materialism,
that morality is generated by the material conditions of
society, is the same as Menger's conception that it is gene-
rated by material force is just as false and misleading as is
the oft-repeated confusion of material conditions with the
material interests of the individual, which reduces Marxism
to that low level of ethics according to which all morality
is reduced to egoism. People who so represent and prop.i
gate the Materialistic Conception of History may consider
themselves good Marxists, but they really belong to those
who reflect little credit on the Marxian teachings, who made
Marx shudder, and with whom he begged not to be con-
founded."
And in his recent book: "Ethics and the Materialistic
Conception of History," Kautsky says:
" While the growing contradiction between the changing
social conditions and the stagnating morality expresses it-
self in the conservative, that is in the ruling classes, in
growing immorality, hypocrisy and cynicism, which often
APPENDIX. 271
go hand in hand with a weakening of the social instinct,
the effect upon the rising and exploited classes is entirely
different. The interests of those classes stand in direct
opposition to the social foundations which created the reign-
ing morality. They have not the slightest reason to defer to
it, and all the reasons to oppose it. With the growth of
their consciousness of their opposition to the existing social
order, grows their moral indignation, their opposition to
the old and antiquated morality, to which they oppose a
new morality, which they advocate as the morality of so-
ciety as a whole. Thus there arises in the rising classes a
moral ideal, which grows in intensity with the growth of
the power of these classes. At the same time, as we have
already seen, the social instincts of these same classes gain
in strength and are particularly developed by the class-
struggle, so that with the intensity of the new moral ideal
grows also the enthusiasm for the same. Thus it is that
the same process of evolution which produces in the con-
servative and declining classes growing immorality, begets
in the rising classes in a steadily increasing number those
phenomena, the aggregation of which we describe as ethical
idealism, which must ' not, however, be confounded with
philosophical idealism. It is just the rising classes that
often incline towards philosophic materialism, which the
declining classes, on the other hand, oppose from the mo-
ment that the fact begins to dawn upon them that the
natural course of evolution has sealed their doom, from
which they can only escape by the intervention of some su-
pernatural, divine, or ethical power."
APPENDIX II.
THE MATERIALISTIC CONCEPTION OF HISTORY AND THE IN-
DIVIDUAL.
One of the points on which the Marxian interpretation of
history is being most persistently misrepresented, is the
question of the influence of the individual on the course of
history. It is one of the favorite occupations of the Marx-
critics of a certain sort to enlarge upon the supposed fact
that the Marxian historical theory preaches fatalism and
leaves no room for the activity of the individual with a
view to influencing the course of events. It is either ex-
pressly stated or tacitly assumed that Marx imagined or
represented History to be a sort of automatic machine run-
ning along a predestined and preordained course, pro-
pelled by a lever called economic factor, without regard or
reference to the will of the human beings whose intelli-
gence it was affecting and whose institutions and destinies
it was shaping. According to these gentlemen, Marx did
not care a whit as to what the human beings whose doings
fill up the pages of History thought or wanted with regard
to the things that they were doing or were about to do. They
assure us that according to Marx and his disciples the
course of History is predetermined (although none of
them ever suggested by whom), — and "economic deter-
minism " is, therefore, their favorite appellation for the
Materialistic Conception of History. The course of History
being predetermined, and the " economic factor " being the
motive-power which propels the car of History on this
predetermined course, it follows of necessity that neither
each individual member of society separately, nor all of its
members collectively, can in any way, by anything he or
they might do, affect or influence this fatal course of His-
tory. Man must cease all intelligent effort to alter, accel-
lerate, or modify the course of History, and must patiently
await the inevitable which Fate has decreed for him, and
which will be brought about while he waits through the
agency of the Economic Factor.
272
APPENDIX. 273
Having changed the Marxian conception of history into
" economic determinism," and having read fatalism into it,
they proceed to show their determined opposition to Marx-
ism on the ground that it is fatal to all intelligent human
activity, particularly of the " idealistic " kind. Of course,
it could easily be proven that neither Marx nor the Marxists
seem to ha've been affected by the supposed fatalism of their
doctrine, and have displayed an intelligent activity and an
active intelligence in all spheres of human thought and ac-
tion that are truly astonishing. Nay, the most astonishing
part of it is that this activity is usually of the most " ideal-
istic " kind imaginable ! But, then, the Marxists have never
been consistent. It behooves us, therefore, to see what
basis there is for the claim of fatalism, in the Materialistic
Conception of History, and what are, according to that
theory, the true possibilities and limitations of the individ-
ual member of society as a history-making factor.
And first of all as to determinism. It may be safely said
that there is absolutely no warrant in anything that Marx
himself wrote for the application of that term, in the sense
in which it is used in this connection, to his historical
theory. Neither the term itself, nor the idea for which it
stands, are to be found in any of his writings. Further-
more, the idea is entirely foreign to the whole spirit of his
theoretical system. While there is nothing in the idea of
determinism which would make it impossible to couple it
with materialism, it is nevertheless essentially part and
parcel of a purely idealistic system such as Hegel's, for in-
stance.
The same is doubly true about fatalism; to say that the
man who said : " Men make their own history " was a
fatalist is such an incongruity that the claim would hardly
merit attention were it not for the persistence with which
it is put forward. We need not depend, however, on any
stray utterance of Marx in order to determine his position
in the matter. We have already seen in the foregoing dis-
cussion in the body of this book, particularly in the chapter
on the Proletariat and the Revolution, the stupendous task
assigned to the working class in bringing about the trans-
formation of the present capitalist society into the socialist
society of the future. That this role ascribed to the prole-
tariat is entirely in keeping with the whole theoretical sys-
tem is perfectly evident to all, who have examined his sys-
tem with any degree of care. There is absolutely nothing
in his explanation of the development of the economic con-
274 THE THEORETICAL SYSTEM OF KARL MARX.
ditions of capitalist society which would suggest the
possibility of the inauguration of the socialist system hy
purely mechanical agencies. Quite to the contrary: as far
as the purely mechanical breakdown of capitalism is con-
cerned, as has been fully explained in the text, it is not a
physical breakdown, as would be necessary in order to ex-
clude the necessary intervention of conscious human ac-
tivity, but rather a moral bankruptcy. Certainly, there is
absolutely nothing in the capitalist system to prevent it
from relapsing into a sort of new feudalism or slavery, with
the collective ownership of the means of production by an
aristocracy of the capitalist class, instead of developing into
a socialist-democratic system.
But not only the transition from capitalism to socialism
requires the active agency of conscious and purposeful hu-
man effort. The whole Marxian theory of the evolution of
society through a series of class- struggles brought about by
a conflict of conditions of production with social institu-
tions is so conceived by Marx as to make the intervention
of human effort for the amelioration of society an absolutely
necessary and integral part of the " conflict." It is only
necessary to remind the reader of the circumstance, pointed
out in the text, that Marx does not speak of the revolutions
as the result of the impossibility of continuing production
under the old institutions, ' but of production being " fet-
tered " by them, a condition implying a moral valuation and
volition of an active human agent.
That the Marxian theory was so understood by his dis-
ciples, can hardly be doubted. The opinions of the best
known among them on the subject of practical idealism,
quoted by us above in the first appendix, proves that
•yond the possibility of a doubt. We will therefore refer
our readers to those expressions of opinion, in order to
avoid unnecessary repetition, as to the authors there quote. 1,
and will only add some expressions of opinion from the
pen of Marx's great Russian disciple, George Plechanott.
\Ve deem it of importance to offer this " cumulative evi-
dence " of Plechanoff not only because of the great esteem
in which his views are held among Marxists, but also lie-
cause he is more circumstantial at this particular point
than any one of the authors already quoted by us, and
does not only show the mere fact that the Marxists admit
the " individual factor " in history but also the limitations
they place on it.
In the first place Plechanoff admits that there is some
APPENDIX. 275
justification for the wide-spread opinion that Marxists deny
to the individual any influence on the course of History.
Not, of course, in anything contained in the writings of
Marx or his immediate disciples, but in some loose talk and
inaccurate expressions of some alleged Marxists. He says:
"While some subj activists, in their efforts to magnify the role
of the ' individual ' in history, refused to acknowledge any his-
torical laws in the process of the social development of humanity,
some of their newest opponents, in their efforts to accentuate the
evolutionary process of this development, evidently forgot that
History is made by men, and that therefore the activities of the
individuals must necessarily influence it. They considered the
individual quantite negligeable. Theoretically, however, such a
view is no more permissible than that of the extreme subjec-
tivists."
And then, after going into a detailed examination of this
question and analyzing some historical examples which bear
upon the subject, he comes to the following conclusion:
" It follows, that some individuals, owing to the peculiarities
of their character, may influence the historical course of events.
Sometimes this influence is quite considerable. But the possi-
bility of such influence, as well as its magnitude, are limited by
the organization of society, by the relation of its forces. The
character of the individual appears as a factor of social develop-
ment only in such places, at such times, and to such an extent,
where, when, and to the extent that, the social relations permit
it.
" It will probably be suggested that the extent of the in-
fluence which an individual may exert on the course of history
depends also on the abilities of the individual. To this we may
readily accede. But the individual can display his abilities only
after he shall have assumed the necessary position in the social
organization. ... It is this organization, therefore, which
limits, at any given time, the role — and consequently the social
influence — which may fall to the lot of gifted or mediocre in-
dividuals."
The raising of the individual to the dignity of a histori-
cal factor raises the question of the influence of chance or
accident in history, which is intimately connected with it.
And he proceeds to elucidate it, thus: »
"Hegel says that in all things finite there is an element of
chance. In science we have to do with the ' finite ' only ; it may
therefore be properly said that in all the processes which she
makes the objects of her study there is an element of the acci-
276 THE THEORETICAL SYSTEM OF KARL MARX.
dental. Does this exclude the possibility of the scientific study
of phenomena? Not at all. Chance is a relative matter. It
appears only at the crossing of necessary processes. The ap-
pearance of the Europeans in America was a matter of accident
for the inhabitants of Mexico and Peru, in the sense that it
was not the result of the social development of those countries.
But the passion for sea-voyages which took hold on the Euro-
peans towards the end of the Middle Ages was not a mere acci-
dent ; nor was it a mere acident that the Europeans easily over-
powered the aborigines. Nor, again, were the results of the con-
quest of Mexico and Peru by the Europeans a mere matter of
accident. These results were in the last analysis caused by the
resultant of two forces : the economic conditions of the con-
quering nations on the one hand, and of the conquered nations
on the .other. And these forces as well as their resultant, can
be fully investigated according to the laws of scientific re-
search."
Plechanoff then proceeds to show that aside from the fact
that the influence of the individual is limited by the inner
structure of the social organization and its relations to
other societies, in the sense that the role assigned to in-
dividuals, and the kind of individuals it is assigned to, de-
pend on the character of the social organization, there is
another limitation imposed upon the influence of the in-
dividual by the social organization, which means, in the last
analysis, by the economic relations of society. And that is,
that the direction of social development, the broad outlines
of the evolution of social institutions, cannot be affected by
the activity of any individual, or any set of individuals.
Speaking of the possibility of certain accidents of the French
Revolution not having occurred or others occurring, and
tin- way such changes woujd have affected that great his-
torical event, he says: —
"All. such changes in the current events might have influenced
to a certain extent the future political, and by means thereof
the economic, life of Europe. But the ultimate outcome of
the revolutionary movement would still not under any circum-
stances have been the reverse of what it actually was. Influen-
tial individuals, owing to peculiarities of mind and character,
may change the individual appearance of events an<!
their minor results, but they cannot change the £<•»<•;<;/ trend of
which is outlined by other f
Having thus circumscribed the sphere of the individual's
influence, having shown its limitations. Plechanoff then pro-
ceeds to show the possibilities of the activity of the individ-
APPENDIX. 277
ual within that sphere, and the real significance of his in-
fluence as thus limited. He says: —
" A great man is great not because his individual peculiarities
give individual form to great historical events, but because of
the fact that he possesses peculiarities which make him best
able to serve the great social needs of his time, needs which
have developed under the influence of general and special
causes. Carlyle, in his " Heroes and Hero. Worship," calls great
men ' beginners/ This is a very apt appellation. A great man
is in fact a beginner, for he sees further than others and desires
more intensely than others. He solves the scientific problems
placed on the order of the day by the preceding intellectual de-
velopment of society; he uncovers new social needs created
by the preceding development of social relations ; he takes upon
himself the task of beginning the satisfaction of those needs.
He is a hero. Not in the sense that he can arrest or modify
the natural course of events, but in the sense that his activity is
the conscious and free expression of that necessary and uncon-
scious course. In that is his importance ; in that his power.
But that is a colossal importance, — a tremendous power."
INDEX.
EARTH (Paul), 15; 35; 44-
BAX (E. Belfort), 36; 38.
BERKELEY (George), 31.
BERNSTEIN (Eduard) : his personality, 14, 15; sensation
caused by his book, 15; his leaning towards nihilism, 12;
his treatment of the three subdivisions of Marxian theory,
16, 61, 137; main points of his " Voraussetzungen," 171,
172, 192; his unintelligent handling of statistics, 174.
BOEHM-BAWERK (Eugen v.) : essay on " Marx and the
Close of his system," 14 ; 61 ; 132 ; Marx's theory of value
a " theory of exploitation," 82 ; his criticism of the Marxian
theory of value, 93, 94; his lack of precision, 99, 100, 101,
102; his objections to Marx's analysis, 103, 104, 108, 109,
114, 117; the Great Contradiction, 135, 136.
BRYAN (W. J.), 208.
BUCKLE (Henry Thomas), 24.
CAPITAL ("Das Kapital") : effect of appearance of last vol-
ume on Marx-criticism, 14; Masaryk's characterization of,
as a text-book of capitalist exploitation, 83 ; opening sen-
tence of first volume, 90; supposed contradiction between
first and third volume, 98, 126; the Great Contradiction
solved by third volume, 128, 129, 131 ; denial of genuine-
ness of third volume, 132.
CAPITAL: properties of, 57; "constant," 74; savings of past
surplus-values, 78; impersonal and abstract character of,
78; distributive share of each individual capital, 79; dif-
ference between " constant " and " variable " capital, 121 ;
accumulation of, possible by constant* replacement of live-
labor by machinery, 157; concentration and centralization
of, 161, 162, 163.
279
280 INDEX.
CAPITALISM: laws governing the capitalist system, 51, 148;
distinctive feature of production under, 54; system built
on ruins of farming, 62, 63 ; made possible by appearance
of labor-power as a commodity, 71 ; essentials of, 154,
155; breakdown of, 163, 216, 230, 231, 232; imperialism
may prolong its existence, 241 ; beginning of the end, 244 ;
Bernstein's criticism of the "law of capitalistic accumu-
lation," 171, 172.
CARLYLE (Thomas), 277.
CIRCULATION: 63, 154.
CLARK (John B.) : 45.
CLASSES: division of society into, 27; based on economic in-
terest, 27 ; how the economically controlling class becomes
politically predominant, 29; class struggle, 30, 181, 233;
Weisengruen's objection to theory of, 46; source of
wealth of our non-producing classes, 59, 74; disappearance
of middle class, 181, 201, 212; peasants a bulwark of capi-
talism, 183, 184, 185; bourgeois character unfit for Social-
ist co-operation, 185, 186, 187 ; influence of corporations on
fortunes of capitalist class, 195; growth of working class,
195 ; " new " middle class and its influence on the process
of the centralization, 205 ; conditions for a social class,
209.
CLASS-STUPIDITY, 261.
CONSUMPTION: 55, 64.
CRISES: 235-239; crisis of 1857, 249.
CRITICS (Marx-) : their claim and characteristics, 10-16,
their "philosophic" objection to Marx, 31 ; lack of definite-
ness, 34; confusion of "economic conditions" with "tech-
nical development," 35; confusion of "economic material-
ism" with "individual materialism," 36; confusion of
"conditions" with "interests," 37; "refuting Marx by
Marx," 39; "contradiction" found by Slominski, 40; an
American Marx-critic, 41-43; pleas for all sorts of
" standpoints " and " factors," 45 ; fashion to treat " eco-
nomics " and "philosophy" separately, 49; failure to dis-
tinguish between individual and social element, 145; 228.
COMMODITIES: analysis of the single commodity, 54, 55,
94; factory product a typical capitalistic commodity, 62;
INDEX. 28l
human labor the element common to all, 67; the peculiar
commodity labor-power, 70, 71.
COMPETITION: 154, 179-
CUNOW (Heinrich) :. 203, 222.
"DEUTSCH-FRANZOS1SCHE JAHRBUCHER": 50.
DIALECTIC MATERIALISM: misconception of meaning,
21 ; what it really means, 22, 23.
"DIE HEILIGE FAMILIE": 31.
DIEHL (Karl): 98; supports Marx on the relation between
Value and Price, 108.
DISTRIBUTION: 25.
ECONOMIC MATERIALISM: 21; economic condition dis-
covered as prime factor, 24; why economic factor is in-
sisted on as the chief material factor, 25, 38; other factors
taken into account, 38, 39.
ENGELS (Frederick): 20; proof of materialistic conception
of history according to, 32, 33; challenge to Marx-critics,
127, 128; 150.
ETHICS AND THE MATERIALISTIC CONCEPTION OF
HISTORY: 270.
EVOLUTION: Method of Marx in contemplating the world,
21 ; laws governing particular course of, in present society,
51; favorite theme of Marx -critics, 132; from capitalism
to socialism, 180.
EXCHANGE-VALUE: distinctive property of a commodity,
55 ; something entirely different from use-value, 55, 56, 57,
58; close connection with use-value, 58; when exchange-
value first manifests itself in life-history of the factory
product, 65; may be adversely affected by some social
change, 75 ; nature does not participate in the creation of
exchange-value, 102.
FEUERBACH (Ludwig) : 20.
GOLDSCHEID (Rudolph): 216, 225-227; 233.
GORKY (Maxim) : 209.
HEGEL (G. W. F.) : "philosophy" came to a close with, 20;
his pure idealism, 31 ; 182 ; 273 1 275.
282 INDEX.
HISTORY : Made a science, 24 ; Weisengruen's denial of a his-
torical science, 34; prime movers of history, 36; historical
theory formulated by Marx, 51 ; history ignored by Marx-
critics, 89.
HUNTER (Robert): 219.
IDEALISM: what it means in philosophy, 22; how Marx dealt
with it, 31 ; how Hegel represented it, 31 ; practical ideal-
ism, 257, 271.
IDEAS: influence on society, 27; their source, 27; their role
in the struggle of the classes, 30, 39 ; rooted in reality, 182 ;
their control by dominating class, 28, 189, 190.
INDIVIDUAL, the materialistic conception of History and the,
271-277.
INTEREST: 98, 198; 200.
JAURES (Jean), 15.
JEVONS (W. S.), 88.
KAUTSKY (Karl), 38; 172; 174; 192; 222; 259-271.
KNIES (Karl), 109.
LABOR (human) : the element common to all commodities,
67, 92, 93; gives the commodity its value, 68, 70, "socially
necessary" not to be confused with "average," 69; when
labor is wasted, 16; abstract human labor a measure of
the exchange- value of commodities, 71, 90, 96; "necessary
labor " and " surplus labor," 73.
LABOR-POWER: separated under capitalism from man's body
and person, 71 ; source of all other commodities as well
as of its own reproduction, 71; dual character, 72; as a
commodity presupposes a high state of technical develop-
ment, 77.
LA MONTE (Robert R.), 257.
LAWSON (Thomas W.), 197.
LITERATURE: (anti-Marxian), 10; 14; 20; 40; 175.
LORIA (Achille), 136.
MANUFACTURER: 64, 65, 66; 74; 130.
MARXISM: scientific character of, 12; crisis in, 12; correla-
tion of the different parts of, 16; outline of the system,
INDEX. 283
16-19; a concrete science, 20; the system in its entirety,
39, 49, 51, 52.
MARX (Karl): dominating influence, 10; dispute whether a
philosopher, 20, 51; his method, 21, 87, 119, 133, 173, 202;
how he came to his theoretical system, 49, 50; his own
formulation of the materialistic conception of history, 51 ;
constructed an economic theory of his own, 52; his life-
work, 57; his motives, 84; Marx's letter on Goth a pro-
gram, 103; most idealistic of philosophers, 182.
MASARYK (Th. G.), 15 ; 33; 41; 48; 82; 98; 109, 137, 138.
MATERIALIST CONCEPTION OF HISTORY: misconcep-
tion of term, 21, 186; what it really means, 23, 36, 37; as
an explanation of human history, 24; and practical ideal-
ism, 257-271 ; and the role of the individual, 272-277.
MEHRING (Franz), on the Materialistic Conception of His-
tory and practical idealism, 266, 267.
MENGER (Karl), 89.
MONEY, 65; 237-
MORALITY, 26, 44-
"NEUE ZEIT," 14; 260; 262; 267; 270.
NIHILISM: of Marx-critics, n, 12; last recourse of the op-
ponents of Marx, 34; gradual growth, 174.
NOSSIG (Alfred), 15; Jewish jubilee as remedy of social evils,
32.
OPPENHEIMER, (Franz), 15, 149, 150; 171, 173; 222, 223;
230.
OVERPRODUCTION, 167.
PLECHANOFF (Georg), on the rote of the individual in his-
tory, 274-277.
POLITICAL ECONOMY: object of, 57; classical school of,
52; Marx's relation to classical school of, 52.
PRICE : form in which exchange-value of commodity realizes
itself, 66, 75, 76, 77; controlled by value, 67, 144; influ-
enced by supply and demand, 107.
PRICE OF PRODUCTION : 79, 144 ; 130 ;' different from cost
of production, 141 ; governed by value of commodity, 145.
284 INDEX.
PRODUCTION: 25; technical development in the means of
production not Always chief cause of change in material
conditions, 35, 36; distinctive feature of capitalist pro-
duction, 54; the factory product — how produced, 63, 64,
65 ; distribution of " surplus " accomplished by laws of
production, 74, 75 ; purpose of production, 91 ; " partici-
pation " of nature in, 101, 102; effect of production for
the market on distribution, 153; adaptability and ex-
pansiveness of the capitalist system of production, 240.
PROFIT: 59; 60; 74; rate of, 79; tendency of rate to dimin-
ish, 120, 124, 125; tendency to increase, 126.
PROLETARIAT: historic mission, 183, 214, 215; difference
between antique and modern, 202; salaried persons part of,
206; active factor of the Revolution, 215; evolves a new
ideology, 228, 229.
RENT: 80; in, 112.
RETAIL DEALER, 64.
REVISIONISM, ii ; first manifestation of, 14; Bernstein's aid
to, 15; Dr. Nossig's attempt to raise it to the dignity of
a system, 15; tendencies of capitalistic development its
proper domain, 170, 171; barren of practical results, 175;
central point of revisionism, 215, 230.
REVISIONISTS: 11; 15, 131; methods employed by, 150, 173.
REVOLUTION (Social), 215, 230.
" RHEINISCHE ZEITUNG," 50.
RICARDO (David), 52; 86; 88.
ROCKEFELLER (John D.), 213.
RODBERTUS (Karl), 86; 127.
ROOSEVELT (Theodore), 208.
ROTHSTEIN (Theodore), 219.
SELIGMAN (E. R. A.): 41, 43; where he and Weisengruen
meet, 45, 48.
STERN (J.), 269-
SLOBODIN (H. L.), 258.
SIMKOVITCH (V. G.), 149, 150.
SLOMINSKI (Ludwig), 40: 48; 51; QO; 941 98: 136; 137
INDEX. 285
SMITH (Adam), 86; 88.
SOCIALISM: Marx and- 51, 149; relation to theory
of value, 149, 151, 153; basis of, 180; the corporation as a
factor in the movement towards- 212.
SOCIETY, 26.
SOMBART (Werner), 15; 133, 134-
SPARGO (John), 219.
SPENCER (Herbert), 187; 207.
STAMMLER (Rudolph), 14.
STATE SOCIALISM, 210.
STRUVE (Peter), 230, 231, 232, 233.
SUPPLY AND DEMAND, 105, 106, 107.
SURPLUS-VALUE: corner stone of Marx's system, 52; mys-
terious source of all wealth shared by non-producing
classes, 73; by what its amount is determined, 72, 73, 74;
division 'of surplus value takes place in circulation process,
76, 143, 144; realization of surplus value require absolute
freedom of movement, 77 ; portion saved for future pro-
duction, 77, 78. (See also Value.).
TAINE (H. A.), 24.
TUGAN-BARANOWSKY (Michael), 15; 149, 150; 230; 239,
240; 242, 243, 244, 245, 246, 247, 248, 249; 243.
UNION : essence of the Labor Union, 224.
USE-VALUE: subjective character of, 55; not within sphere
of political economy, 55.
VALUE : 6 1 ; not to be confounded with price, 66, 67, 107 ; by
what measured, 68, 92, 93; usefulness included as a fac-
tor, 97, 98; supply and demand neither source nor measure
of value, 105; value a relative term, 106; place of theory
in Marxian system, 61 ; alleged exceptions to labor theory
of, 109-117; failure of Marx-critics to distinguish between
individual and social elements in, 145, 228.
See also SURPLUS-VALUE, EXCHANGE-VALUE,
USE-VALUE.,
WAGES: amount of, 72; time taken in producing it, 73; ten-
dency to be lowered by " reserve " army, 159.
286 INDEX.
WASTE: Capitalism lives and thrives by, 246, 248, 250; two
kinds of, 250; military and naval waste, 252.
WEALTH : nature of it under existing system, 53 ; dependent
on social circumstances, 54; an aggregation of exchange-
values, 57; mystery surrounding the origin of our wealth,
58; labor not the only source of wealth, 102, 105.
WEISENGRUEN (Paul), 12 — what he says of the crises in
Marxism, 12; leaning toward Berkeley, 31; claim for
phantasy as maker of history, 32; gives much credit to
materialistic conception of history, 33 ; denies history is a
science, 34; groundless point against Marx, 35; objection
to theory of class struggle, 46 ; materialism run mad, 47.
V/ENCKSTERN (Rudolph), 15.
WOLTMAN (Ludwig), 15.
WORKINGMEN: What is due them, 82, 83, 84; rates of ex-
ploitation of, grows with higher composition of capital,
125 ; freedom from personal bondage and ties of property,
155; reserve army, 158; growing poverty of not a neces-
sary result of the evolution of capitalism, 220, 222.
"ZUR KRITIX," 26; 50; 255.
BINDING SECT. FEB 2 - 1965
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